Steve Brito, Yan Carriere-Swallow, and Bertrand Gruss
INTERNATIONAL MONETARY FUND
We estimate the determinants of disagreement about future inflation in a large and diverse
sample of countries, focusing on the role of monetary policy frameworks. We offer novel
insights that allow us to reconcile mixed findings in the literature on the benefits of inflation
targeting regimes and central bank transparency. The reduction in disagreement that follows
the adoption of inflation targeting is entirely due to increased central bank transparency.
Since the benefits of increased transparency are non-linear, the gains from inflation targeting
adoption have accrued mainly to countries that started from a low level of transparency.
These have tended to be developing countries.