This series aims to make available to the general public and to economic policy practitioners, a selection of policy papers prepared by the staff of the International Monetary Fund. Papers in the International Economic Policy Review will offer specific policy-relevant analysis, but at a relatively non-technical level. These papers are intended to provide analytical background for IMF-supported programs and more generally to shed light on a range of policy choices facing ministries and central banks.
This paper draws implications for the design of disinflation programs of a recent study which analyzed whether inflation in transition economies resulted from insufficiently tight financial policies and wage pressures or from the protracted adjustment of relative prices. Based on the main findings, the paper discusses considerations relevant to the setting of inflation targets—in particular those guiding the choice between rapid achievement of low inflation and acceptance of prolonged moderate inflation to accommodate needed changes in relative prices. Given the dominance of money growth in explaining inflation, implications for the nominal anchor strategy to achieve disinflation are discussed.
You are not logged in and do not have access to this content. Please login or, to subscribe to IMF eLibrary, please click here