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Credibility and monetary policy under inflation targeting

Author

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  • mhamdi, ghrissi
  • aguir, abdelkader
  • farhani, ramzi

Abstract

After more than two decades of inflation targeting in the world, it is important to evaluate if the adoption of this regime in a relevant developing country contributed to the creation of a better environment for the process of entrepreneurs' expectations formation. Brazil is part of an important group of developing countries and represents a potential laboratory experiment in which the effects of an adoption of inflation targeting after more than a decade can be evaluated. Not enough is known about the consequences of inflation targeting credibility on both monetary policy and monetary policy transmission channels in developing countries that adopted inflation targeting. Emphasizing the role of transparency and the credibility of monetary policy as a performance criterion that motivate any country wishing to adopt an inflation targeting regime, this study leads to the fact that these two basic principles toward which a inflation targeting regime cannot be achieved without respect for certain pre namely institutional and technical conditions

Suggested Citation

  • mhamdi, ghrissi & aguir, abdelkader & farhani, ramzi, 2015. "Credibility and monetary policy under inflation targeting," MPRA Paper 64034, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:64034
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    References listed on IDEAS

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    1. César Calderón & Roberto Duncan & Klaus Schmidt-Hebbel, 2004. "The role of credibility in the cyclical properties of macroeconomic policies in emerging economies," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 140(4), pages 613-633, December.
    2. Cragg, John G, 1983. "More Efficient Estimation in the Presence of Heteroscedasticity of Unknown Form," Econometrica, Econometric Society, vol. 51(3), pages 751-763, May.
    3. Helder Ferreira de Mendonca, 2007. "Empirical evidence from fourteen countries with explicit inflation targeting," Applied Economics Letters, Taylor & Francis Journals, vol. 14(8), pages 573-576.
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    Cited by:

    1. Moses K. Tule & Oloruntoba S. Ogundele & Martins O. Apinran, 2018. "Efficacy of Monetary Policy Instruments on Economic Growth: Evidence from Nigeria," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(10), pages 1239-1256, October.

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    More about this item

    Keywords

    Credibility; Inflation targeting; Investment; Employment; Central bank; Interest rate.;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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