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Inflation Targeting as a Framework for Monetary Policy

  • Guy Debelle
  • Miguel A. Savastano
  • Paul R. Masson
  • Sunil Sharma

Inflation distorts prices, erodes savings, discourages investment, stimulates capital flight, inhibits growth, and makes economic planning a nightmare. During the past decade, several advanced economies have taken a new approach to the age-old problem of controlling inflation through monetary policy known as "inflation targeting." This pamphlet explains the requirements of putting the new policy in place, the experience of the countries that have tried it, and whether it has applicability to developing countries.

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Paper provided by International Monetary Fund in its series IMF Economic Issues with number 15.

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Length: 20
Date of creation: 02 Oct 1998
Date of revision:
Handle: RePEc:imf:imfeci:15
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  1. Svensson, Lars E O, 1999. " Inflation Targeting: Some Extensions," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(3), pages 337-61, September.
  2. David T. Coe & C. John McDermott, 1997. "Does the Gap Model Work in Asia?," IMF Staff Papers, Palgrave Macmillan, vol. 44(1), pages 59-80, March.
  3. Dornbusch, Rudiger & Fischer, Stanley, 1993. "Moderate Inflation," World Bank Economic Review, World Bank Group, vol. 7(1), pages 1-44, January.
  4. J. H. Green, 1996. "Inflation Targeting: Theory and Policy Implications," IMF Working Papers 96/65, International Monetary Fund.
  5. Giovannini, Alberto & de Melo, Martha, 1993. "Government Revenue from Financial Repression," American Economic Review, American Economic Association, vol. 83(4), pages 953-63, September.
  6. Guillermo A. Calvo & Carlos A. VĂ©gh, 1994. "Inflation Stabilization And Nominal Anchors," Contemporary Economic Policy, Western Economic Association International, vol. 12(2), pages 35-45, 04.
  7. Alex Cukierman & Sebastian Edwards & Guido Tabellini, 1989. "Seigniorage and Political Instability," NBER Working Papers 3199, National Bureau of Economic Research, Inc.
  8. Stephen G. Cecchetti, 1995. "Inflation Indicators and Inflation Policy," NBER Chapters, in: NBER Macroeconomics Annual 1995, Volume 10, pages 189-236 National Bureau of Economic Research, Inc.
  9. Jose De Gregorio & Peter Wickham & Patricio Arrau & Carmen Reinhart, 1991. "The Demand for Money in Developing Countries: Assessing the Role of Financial innovation," IMF Working Papers 91/45, International Monetary Fund.
  10. Reinhart, Carmen & Calvo, Guillermo & Leiderman, Leonardo, 1993. "El problema de la afluencia de capital: Conceptos y temas
    [The Capital Inflows Problem: Concepts and Issues]
    ," MPRA Paper 13682, University Library of Munich, Germany.
  11. John H. Green, 1996. "Inflation Targeting: Theory and Policy Implications," IMF Staff Papers, Palgrave Macmillan, vol. 43(4), pages 779-795, December.
  12. Stanley Fischer, 1995. "The Unending Search for Monetary Salvation," NBER Chapters, in: NBER Macroeconomics Annual 1995, Volume 10, pages 275-298 National Bureau of Economic Research, Inc.
  13. Blake, Andrew P & Westaway, Peter F, 1996. "Credibility and the Effectiveness of Inflation Targeting Regimes," The Manchester School of Economic & Social Studies, University of Manchester, vol. 64(0), pages 28-50, Suppl..
  14. Stanley Fischer, 1993. "The Role of Macroeconomic Factors in Growth," NBER Working Papers 4565, National Bureau of Economic Research, Inc.
  15. Dornbusch, Rudiger, 1982. "Stabilization policies in developing countries: What have we learned?," World Development, Elsevier, vol. 10(9), pages 701-708, September.
  16. Kiguel, Miguel A & Neumeyer, Pablo Andres, 1995. "Seigniorage and Inflation: The Case of Argentina," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(3), pages 672-82, August.
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