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The feasibility of adopting inflation targeting in Malawi: an empirical analysis

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  • Kisu Simwaka

    (Reserve Bank of Malawi, P.O. Box 30063, Lilongwe, Malawi)

Abstract

This study attempts to examine the minimum requirements for adopting an inflation targeting framework in Malawi. First, we examined four pre- requisites of an inflation targeting framework: a fairy long track record of low and stable inflation; a degree of independence; having a sole target; and the existence of a predictable and stable relationships between monetary policy and inflation outcomes. The findings indicate that while the requirement of having a sole target has been satisfied, there are still problems associated with the Reserve Bank of Malawi’s independence and the existence of stable and predictable relationship between monetary policy instruments and inflation in Malawi. Therefore, Malawi is yet to reach a stage where a fully-fledged inflation targeting framework could be incorporated into its overall strategy. Keywords: Inflation targeting; central bank independence; vector autoregression Authors’ E-Mail Address: ksimwaka@rbm.malawi.net

Suggested Citation

  • Kisu Simwaka, 2004. "The feasibility of adopting inflation targeting in Malawi: an empirical analysis," Macroeconomics 0407015, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:0407015
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    References listed on IDEAS

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    5. Paul R. Masson & Miguel A. Savastano & Sunil Sharma, 2019. "The Scope for Inflation Targeting in Developing Countries," World Scientific Book Chapters, in: Macroeconomic Modelling and Monetary and Exchange Rate Regimes, chapter 10, pages 331-383, World Scientific Publishing Co. Pte. Ltd..
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    • E - Macroeconomics and Monetary Economics

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