Inflation Targeting Policies in Less-Developed Countries: Some Evidence and Potential

Inflation Targeting (IT) is a macro-monetary policy tool, originally introduced in New Zealand and now adopted by several countries, that can lead to relatively stable and low inflation rates through the adoption of an explicit inflation target, one that can, if successful, lead to enhanced credibil...

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Bibliographic Details
Published inThe Journal of social, political, and economic studies Vol. 33; no. 1; pp. 71 - 83
Main Authors Ghazanfar, S M, Sevcik, Candelaria L
Format Journal Article
LanguageEnglish
Published Washington Council for Social and Economic Studies, Inc 01.04.2008
Subjects
Accountability
Central banks
Chile
Credibility
Cross-sectional studies
Developing Countries
Discipline
Economic conditions
Economic models
Economic Policy
Inflation
Inflation rates
LDCs
Monetary policy
New Zealand
Studies
Success
Transparency
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Summary:Inflation Targeting (IT) is a macro-monetary policy tool, originally introduced in New Zealand and now adopted by several countries, that can lead to relatively stable and low inflation rates through the adoption of an explicit inflation target, one that can, if successful, lead to enhanced credibility, transparency, and accountability. While noting some of the pros and cons, evidence reveals considerable success in various less-developed countries (LDCs) with this approach, though results with respect to DCs are rather mixed. IT success in the LDCs means reduced inflation rates and lower output volatility, and diminished inflationary expectations. The paper examines these aspects of inflation targeting and also discusses Chile's experience with IT and the lessons from that experience that can be potentially useful for other LDCs. Adapted from the source document.
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ISSN:0278-839X