This report on Adopting Inflation Targeting describes the trade-offs raised in the formulation of an inflation targeting framework and states the approaches to these trade-offs used by inflation targeting countries. The inherent differences discussed in this report between the six emerging market inflation targeting countries—Brazil, Chile, the Czech Republic, Israel, Poland, and South Africa—and other emerging market countries may shed some light on the preferred starting point and conditions for inflation targeting. Most central banks in emerging market countries have taken important organizational steps to enhance their capacity to apply greater judgment and foster transparency and accountability. These steps can be particularly challenging for emerging market central banks that have traditionally operated with controls and regulations and have been reluctant to communicate their policy intentions and economic outlooks. During the transition to full-fledged inflation targeting, several emerging market countries have confronted the challenge of dis-inflating to the long-run inflation objective.
Upon entry into the European Union, countries become members of the Economic and Monetary Union (EMU), with a derogation from adopting the euro as their currency (that is, each country joining the EU commits to replace its national currency with the euro, but can choose when to request permission to do so). For most of these countries, adopting the euro will entail major economic change. This paper examines likely economic developments and policy challenges for the five former transition countries in central Europe--the Czech Republic, Hungary, Poland, the Slovak Republic, and Slovenia--that joined the European Union in May 2004 and operate under independent monetary policies but have not yet achieved policy convergence with the rest of the euro area.
The OECD’s most recent Employment Outlook (September 1986) refers to the increasing incidence and importance of “concealed activities, linked to the emergence of new forms of working arrangements.”53 It highlights a number of policy concerns that stem from the existence of varying degrees of concealed employment, such as the adverse effects on the public finances through misallocation of social benefits and, in general, the unintended distortions that the implementation of a given set of policies on such issues as contribution rates, labor market flexibility, and part-time employment may introduce in the presence of sizable concealed or irregular activity. It also refers to “the effect of concealed employment on public perceptions and on public acceptance of government policies and the legal framework.” The Spanish authorities have long been aware that substantial concealed employment may have introduced an upward bias on the official rate of unemployment.54 With the aim of gauging the extent of this bias and of obtaining important qualitative and quantitative information on overall working conditions in Spain, the authorities conducted in late 1985 a comprehensive survey of Spain’s employment situation.55
This paper was prepared by Bijan B. Aghevli, Division Chief in the international Monetary Fund's Asian Department, and Jorge Marquez-Ruarte, Senior Economist in the Asian Department. In preparing the paper, the authors have relied extensively on the analysis and information provided by the Korean authorities as well as on the work of the Fund staff on Korea during the period under study.
Mr. Gyorgy Szapary, Mr. Steven V Dunaway, Mr. David Burton, and Mr. Mario I. Bléjer
China encountered problems preserving economic stability while pursuing reforms aimed at increasing its economic flexibility and efficiency. This paper examines China's experience with market-oriented reforms since 1978, offering lessons for other centrally planned economies in the midst of transition to free markets.
During the last 25 years, monetary practice in most countries has increasingly been characterized by the attempt to achieve credibility of purpose while expanding the freedom of monetary authorities in controlling policy instruments. Thus, the world has moved toward monetary frameworks in which, through appropriate institutional devices, a better trade-off between credibility of goals and flexibility of instruments could be achieved. This attempt, surveyed in this paper, has taken many forms, depending on the countries economic, institutional, and cultural specificities.