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Targeting Inflation in a Dollarized Economy: The Peruvian Experience

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  • Armas, Adrián
  • Grippa, Francisco

Abstract

This discusses the unique experience of Peru's Central Bank with inflation targeting in an economy characterized by a high degree of financial dollarization. The paper outlines how Peru has taken financial dollarization into consideration in the design of monetary policy, then deals with monetary policy implementation and the Central Bank's strategy for controlling financial dollarization risks. The paper concludes with analysis and lessons drawn from the Peruvian case.

Suggested Citation

  • Armas, Adrián & Grippa, Francisco, 2005. "Targeting Inflation in a Dollarized Economy: The Peruvian Experience," IDB Publications (Working Papers) 1925, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:1925
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    References listed on IDEAS

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    1. Javier Gómez & Juan Manuel Julio, 2001. "Transmission Mechanisms and Inflation Targeting: The Case of Colombia Disinflation," Borradores de Economia 168, Banco de la Republica de Colombia.
    2. Morris Goldstein, 2002. "Managed Floating Plus," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa66, October.
    3. Armas, Adrián & Grippa, Francisco & Quispe, Zenón & Valdivia, Luis, 2001. "De metas monetarias a metas de inflación en una economía con dolarización parcial: El caso peruano," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 7.
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    5. Carranza, Luis & Galdon-Sanchez, Jose E. & Gomez-Biscarri, Javier, 2009. "Exchange rate and inflation dynamics in dollarized economies," Journal of Development Economics, Elsevier, vol. 89(1), pages 98-108, May.
    6. Jonathan McCarthy, 2007. "Pass-Through of Exchange Rates and Import Prices to Domestic Inflation in Some Industrialized Economies," Eastern Economic Journal, Eastern Economic Association, vol. 33(4), pages 511-537, Fall.
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    8. Renzo Rossini Miñán, 2002. "Aspectos de la adopción de un esquema de metas explícitas de inflación en el Perú," Revista de Análisis del BCB, Banco Central de Bolivia, vol. 5(1), pages 47-67, June.
    9. Carranza, Luis J. & Cayo, Juan M. & Galdon-Sanchez, Jose E., 2003. "Exchange rate volatility and economic performance in Peru: a firm level analysis," Emerging Markets Review, Elsevier, vol. 4(4), pages 472-496, December.
    10. Luque, Javier & Vega, Marco, 2003. "Usando un modelo semi-estructural de pequeña escala para hacer proyecciones: Algunas consideraciones," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 10.
    11. Ize, Alain, 2001. "Implicancias de la dolarización parcial para el régimen de metas de inflación: Un análisis basado en la literatura sobre dolarización," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 7.
    12. Paulo Springer de Freitas & Marcelo Kfoury Muinhos, 2001. "A Simple Model for Inflation Targeting in Brazil," Working Papers Series 18, Central Bank of Brazil, Research Department.
    13. Carmen M. Reinhart & Kenneth S. Rogoff & Miguel A. Savastano, 2014. "Addicted to Dollars," Annals of Economics and Finance, Society for AEF, vol. 15(1), pages 1-50, May.
    14. Stone, Mark R., 2001. "Aspectos prácticos de la adopción de un esquema de metas de inflación en economías emergentes: Posibles implicancias para el Perú," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 7.
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    2. Tashu, Melesse, 2018. "Determinantes del Tipo de Cambio Real de Equilibrio en Perú: ¿Es el sol una moneda commodity?," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 36, pages 9-30.
    3. Ramos, María Gracia & Winkelried, Diego, 2016. "Tendencias comunes en el índice de precios al consumidor," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 31, pages 29-44.
    4. Paul Castillo & Alberto Humala & Vicente Tuesta, 2007. "Monetary Policy, Regime Shifts, and Inflation Uncertainty in Peru (1949-2006)," Working Papers 2007-005, Banco Central de Reserva del Perú.

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