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Targeting core inflation in emerging market economies

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  • Stan du Plessis

    () (Department of Economics, University of Stellenbosch)

Abstract

The pre-crisis monetary policy consensus has been challenged on a number of fronts. Even the nominal target, around which the modern consensus developed, has been called into question, with a vigorous recent debate ensuing about nominal income targeting as an alternative. This paper contributes to the controversy by arguing that one important reform of inflation-targeting regimes that deserves more attention is reformulating their targets explicitly in terms of core inflation. Core inflation targeting has a better theoretical grounding from both welfare economics and business cycle perspectives, holds practical advantages for inflation-targeting central banks, and has the promising feature of improving the frankness and accountability of monetary policy.

Suggested Citation

  • Stan du Plessis, 2014. "Targeting core inflation in emerging market economies," Working Papers 23/2014, Stellenbosch University, Department of Economics.
  • Handle: RePEc:sza:wpaper:wpapers228
    as

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    File URL: https://www.ekon.sun.ac.za/wpapers/2014/wp232014/wp-23-2014d.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Inflation; Core inflation; Inflation-targeting; Monetary policy;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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