- Mario Bléjer, Alain Ize, Alfredo Leone, and Sérgio Werlang
- Published Date:
- August 2000
© 2000 International Monetary Fund
Cover design and figures: Luisa Menjivar-Macdonald
Typesetting: Alicia Etchebarne-Bourdin
Library of Congress Cataloging-in-Publication Data
Inflation targeting in practice: strategic and operational issues and application to emerging market economies / editors, Mario I. Blejer … [et al.].
Includes bibliographical references.
1. Inflation (Finance)—Government policy—Case studies. 2. Monetary policy—Case studies. I. Blejer, Mario I. II. International Monetary Fund.
HG229.I4567 2000 00-035115
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Mario I. Blejer and Alfredo M. Leone
Felipe Morandé and Klaus Schmidt-Hebbel
Leonardo Leiderman and Gil Bufman
Agustín G. Carstens and Alejandro M. Werner
Research Department, Central Bank of Brazil
Claes Berg is Chief Economist in the Economics Department of the Sveriges Riksbank.
Mario I. Blejer is Senior Advisor in the Asia and Pacific Department at the International Monetary Fund.
Gil Bufman is Lecturer at the Academic College of Tel-Aviv Yaffo and a private economic consultant.
Agustín G. Carstens is Executive Director at the International Monetary Fund.
Guy Debelle is Deputy Head of the Economic Analysis Department at the Reserve Bank of Australia.
Marvin Goodfriend is Senior Vice President and Director of Research at the Federal Reserve Bank of Richmond.
Andrew Haldane is Head of International Finance at the Bank of England.
Alain Ize is Advisor in the Monetary and Exchange Affairs Department at the International Monetary Fund.
Leonardo Leiderman is Senior Director of the Research Department at the Bank of Israel and Professor of Economics at the Berglas School of Economics at Tel-Aviv University.
Alfredo M. Leone is Chief, Financial Systems Surveillance Division I, in the Monetary and Exchange Affairs Department at the International Monetary Fund.
David Longworth was, at the time of the conference, Chief of the Research Department of the Bank of Canada.
Felipe Morandé is Chief Economist at the Central Bank of Chile.
Klaus Schmidt-Hebbel is Chief of Economic Research at the Central Bank of Chile.
Murray Sherwin is Deputy Governor of the Reserve Bank of New Zealand.
Sergio Werlang is Deputy Governor of the Central Bank of Brazil.
Alejandro M. Werner is Director of Research at the Bank of Mexico.
In the aftermath of its resolution, in January 1999, to float the exchange rate of the real, the Central Bank of Brazil decided also to change the operational framework of its monetary policy and to adopt an explicit inflation targeting approach. In so doing, Brazil followed an increasing number of economies, both industrial and emerging, that have moved toward this type of arrangement. To inform the process of preparing for the introduction of the new scheme, the Central Bank of Brazil and the Monetary and Exchange Affairs Department of the International Monetary Fund held a seminar on inflation targeting in Rio de Janeiro on May 3–5, 1999. Its purpose was to analyze the experience to date of the countries that have been operating under an inflation targeting framework, and to identify and review the steps that Brazil should consider in adopting such a framework, to enhance the chances of its success.
Experts from 10 central banks joined their Brazilian counterparts and officials from the IMF in an in-depth examination of the recent experience, including practical aspects of the design and operation of inflation targeting in both industrial and emerging economies. A paper on the usefulness of inflation targeting in pursuing price stability and comprehensive papers on each of nine countries were presented and discussed. This volume gathers together the summaries of those presentations, which treat the main relevant points raised in the papers without entering into the most country-specific details. The objective is to present a concise but complete guide to the theoretical considerations and practical aspects that are important in assessing the benefits and costs of this increasingly popular monetary strategy.
The editors are grateful to the contributing authors for their efforts in preparing the concise versions of their papers, and to their colleagues at the Central Bank of Brazil and in the Monetary and Exchange Affairs Department and the Western Hemisphere Department of the IMF. They are also thankful to Nora Mori-Whitehouse for her efficient logistical and technical support in the preparation of this volume.