One Decade of Inflation Targeting in the World: What Do We Know and what Do We Need to Know?One decade of inflation targeting in the world offers lessons on the design and implementation of inflation targeting, the conduct of monetary policy, and country performance under inflation targeting. This paper reviews briefly the main design features of 18 inflation targeting experiences, analyzes statistically if countries under inflation targeting are structurally different from non-inflation targeting industrial countries, and reviews existing evidence about the success of inflation targeting. The interaction of inflation targeting design features and the conduct of monetary policy during transition to low inflation are tackled next. The paper ends by focusing on unresolved issues on design and implementation of inflation targeting and their relation to the conduct of monetary policy open issues that have to be addressed in the next decade of inflation targeting. |
Common terms and phrases
adopted inflation targeting adoption of inflation aggregate demand asset prices Bank of Chile Bank of England Bank of Mexico Bernanke Brazil CB Pub CBFI CBGI central bank Central de Chile conduct of monetary Corbo core inflation country sources credibility Czech Republic depreciation Design of Inflation Diciembre 2000 disinflation Documentos de Trabajo Economic emerging market countries escape clauses exchange rate Federal Reserve Bank Fiscal Fischer floor of zero goal independence Headline CPI headline inflation industrial countries inflation expectations inflation forecast inflation measure inflation projections inflation report inflation targeting regime inflation-targeting regime instrument independence International Financial Statistics issues Level Targeting long-run inflation goal long-run target low inflation Macroeconomic medium-term inflation target medium-term target mimeo Mishkin monetary policy Monetary Policy Rules Morandé negative non-inflation targeters overshoots Paper price level Price Stability price-level target sample Schaechter Schmidt-Hebbel set the medium-term supply shocks Svensson target horizon trade shock Transmission Mechanism undershoots variables Zealand