IV Transition Issues
Author: Mr. Mark Zelmer and Ms. Andrea Schaechter
Language:
English
Keywords:
OP; central bank; inflation targeting framework; emerging market country; country; inflation expectation; target path; inflation targeting country; Inflation targeting; Inflation; Emerging and frontier financial markets; Africa
Download PDF (1.3 MB)

Abstract

Most emerging market countries have undergone a period of transition prior to adopting a full-fledged inflation targeting framework (Table 4.1). Policymakers have marked the beginning of the transition period by announcing the intention to adopt inflation targeting or by announcing an inflation target in the context of an exchange rate band. The transition period ends when most of the elements of a full-fledged in nation targeting framework are in place. Emerging market countries’ transitions to full-fledged inflation targeting have ranged from slow (Chile and Israel) to fast (Brazil, Czech Republic, Poland, and South Africa).

Most emerging market countries have undergone a period of transition prior to adopting a full-fledged inflation targeting framework (Table 4.1). Policymakers have marked the beginning of the transition period by announcing the intention to adopt inflation targeting or by announcing an inflation target in the context of an exchange rate band. The transition period ends when most of the elements of a full-fledged in nation targeting framework are in place. Emerging market countries’ transitions to full-fledged inflation targeting have ranged from slow (Chile and Israel) to fast (Brazil, Czech Republic, Poland, and South Africa).

Table 4.1.

Timing of Transitions to Full-Fledged Inflation Targeting by Emerging Market Countries

article image
Sources: Leone (1999), Landerretche and others (1999), Bernanke and others (1999), Clinton (2000), Leiderman and Bar-Or (2000), IMF (2000), and central bank websites.

Official announcement of intend on to adopt an inflation targeting framework.

Announcement of first inflation target.

Announcement of details of full-fledged inflation targeting framework.

Abandonment of exchange rate band or broadening of the band to a range that makes policy conflicts between the exchange rate and the inflation target unlikely.

Inflation Trends

Most industrial countries have adopted a full-fledged inflation targeting framework at a time when inflation was declining (Table 4.2). The only exception is Canada, where the move toward inflation targeting was timed to mitigate the potential inflationary impact of the introduction of a new indirect tax. All of the industrial countries adopted inflation targeting during or just before an economic downturn—as gauged by output gaps recorded in the World Economic Outlook database. Moreover, the adoption of inflation targeting by the European countries, notably Sweden and the United Kingdom, occurred in the wake of the breakdown of the Exchange Rate Mechanism of the European Monetary System and the abandonment of exchange rate pegs.

Table 4.2.

Inflation During Transition to Full-Fledged Inflation Targeting1,2

(Percent)

article image
Source: IMF, International Financial Statistics.

Monthly CPI year-over-year inflation.

t is time of the adoption of full-fledged inflation targeting framework.

Excluding the estimated impact of increases in indirect taxes.

The choice between a gradual and fast track transition for emerging market countries reflects the level of inflation at the beginning of the transition (Table 4.3). Chile and Israel decided to follow the riskier course of first announcing inflation targets to bring down stubbornly high inflationary expectations. The other emerging market countries either had short transition periods or moved directly to full-fledged inflation targeting in a setting of lower and declining inflation. In addition, the countries that moved to inflation targeting in the late 1990s may have benefited from what had already been learned about this framework, whereas Chile and Israel had to “learn by doing.”

Table 4.3.

Inflation Prior to Beginning of Transition to Inflation Targeting1

(Annual overage CPI inflation; percent)

article image
Source: IMFInternational Financial Statistics.

t is time of the start of the transition to full-fledged inflation targeting framework.

Disinflation Experiences

Most countries that started with higher rates of inflation and crawling exchange rate regimes disinflated over long transition periods to limit disruptions to the real economy. Chile and Israel slowly shifted from a crawling exchange rate regime to an inflation targeting framework. Their experiences are illuminating because they were the first emerging market countries to announce inflation targets and they began their transition to a full-fledged inflation targeting framework when inflation was at double digit levels.

After a decade when inflation fluctuated around 25 percent. Chile began announcing inflation targets in 1990 and adopted full-fledged inflation targeting in 1999. A major reason for the move toward inflation targeting was to bring down stubbornly high inflation expectations by providing the public with an explicit inflation objective (Landerretche and others, 1999). The Chilean central bank relied on a series of annual targets to guide the inflation rate lower in recognition of the high initial inflation rate, potentially large short-term losses in real output, and employment associated with disinflation in the context of widespread indexation of wages and prices, in addition to the risk of triggering turbulence in the foreign exchange markets.

In Israel, inflation targets were introduced in 1991 as an important input into the specification of an upward slope for the crawling exchange rate peg. There was no clear perception at the outset as to the central bank’s degree of commitment to achieving the inflation targets; only gradually, over a number of years, did the inflation targets develop a life of their own as the authorities demonstrated that achieving them was the primary objective of monetary policy (Bemanke and others, 1999; Leiderman and Bar-Or, 2000). The length of the disinflation in Israel reflected the limited degree of public support for an active program to reduce inflation to single digit levels if that program meant incurring real costs in terms of lost output or higher unemployment (Offenbacher, 1996). These costs were potentially significant in Israel given the widespread practice of indexation of prices in local contracts and the country’s history of high inflation. Consequently, monetary policy aimed to encourage more forward looking behavior on the part of wage and price-setters and a move away from indexation.

Chile and Israel distinguished between the long-run inflation goal and interim inflation targets. The real costs of disinflation depend importantly on how fast inflation is brought down, the extent of nominal rigidities in the underlying economy, and on the attainment of credibility. By using annual targets to adjust the speed of disinflation and take advantage of unexpected disinflation opportunities, the real costs of reducing inflation could be moderated, and employment and output maximized, while at the same time maintaining a strong commitment to long-run inflation control. The adoption of inflation targeting can lead to mutually reinforcing structural reforms in other areas, especially fiscal consolidation, which reduce the costs of disinflation (Leiderman and Bar-Or, 2000).

The durable success of the disinflation efforts of Chile and Israel are instructive. Their initial rates of inflation were moderate—less than 25 percent. Moreover, disinflation was made easier by lasting improvements in structural and fiscal policies. Trend improvements in productivity followed from structural reforms in both countries as well as immigration for Israel. Government debt was reduced sharply in Chile, and the financial systems in both countries were strong enough to weather the Mexican and Asian crises of the late 1990s.

Inflation targeting frameworks notably have not been used to engineer major disinflation from a starting point of high inflation, however. More experience with inflation targeting-based disinflation will be needed before it can be compared with exchange rate– or money-based approaches, which have been used with mixed success to bring inflation down from high levels relatively quickly (Calvo and Végh, 1999).

Shifting from an Exchange Rate Regime

Nine of the 13 inflation targeting countries shifted from an exchange rate targeting regime (Table 4.4). Chile and Israel announced their inflation targets in the context of formulating exchange rate target paths. More recently, emerging market countries have adopted inflation targeting rapidly after dropping their previous monetary framework and announcing their commitment to inflation targeting (Brazil, Poland, and South Africa).

Table 4.4.

Exchange Rate Regime Prior to Adoption of Inflation Targeting

article image
Sources: IMF, Exchange Arrangements and Exchange Restrictions; central bank websites.

The experiences of Chile and Israel may offer some practical lessons on how to minimize the inherent conflicts between exchange rate and price stability for emerging market countries that want to take the slow track approach. Early on, after the announcement of the new inflation targets, the exchange rate could be viewed as entering independently into the objective function of policymakers owing to its importance for the real sector and for exchange rate stability in these open economies. Many of the features of Chile’s crawling band (width, rate of crawl, reference currency basket, degree of symmetry, and central parity level) were modified in response to changing policy objectives and market conditions (Landerretche and others, 1999; Ugolini, 1996). Over time, conflicts between the inflation target and the exchange rate band were usually solved in favor of the former. In mid-1995, the declining weight of the exchange rate in Israel was marked by the widening of the crawling band in response to appreciation pressures to 14 percent, to 28 percent in 1997, and then to 40 percent in 1999. Chile also continuously widened its exchange rate band and abandoned it in September 1999.

Both countries judiciously used foreign exchange intervention to keep the exchange rate within the pre-announced crawling band. Intervention by the Chilean central bank to keep the exchange rate within the band was frequent and intense. Similarly, heavy sterilized foreign exchange intervention was undertaken by the Bank of Israel to keep the Israeli currency (shekel) from appreciating outside its band in response to capital inflows.

Balancing Risks

The unfavorable economic developments that often motivate the shift to inflation targeting can pose risks for its credibility. Inflation targeting often has been introduced in the wake of exchange rate crises, high inflation, and poor overall economic performance (Table 4.5). In addition, four countries have been motivated by their prospective accession to European Economic and Monetary Union (EMU). Adopting inflation targeting before enough time has passed from the time of the motivating crisis or period of unfavorable economic developments risks a recurrence of these factors, which could compel monetary policy to subordinate the new inflation objective. This risk is especially important for emerging market countries because they are more prone to fiscal imbalances and financial and exchange rate crises (IMF, 1998b).

Table 4.5.

Motivations for Adopting Inflation Targeting

article image
Sources: Bernanke and others, (1999), Morandé and Schmidt-Hebbel (2000), Clinton (2000), and central bank reports.

Instability in monetary aggregates provided a further motive.

A strong fiscal position is essential for the successful operation of inflation targeting. Monetization of government debt that could jeopardize the credibility of the inflation target is precluded by a sufficiently strong fiscal position (Kumhoff, 2000). A lack of fiscal discipline can also complicate monetary policy by undermining the capacity of the central bank to conduct effective monetary operations with government securities. Moreover, large fiscal imbalances may require the central bank to pursue a tighter-than-desired monetary policy stance to demonstrate its commitment to inflation control. Such a constraint on monetary policy was experienced by the Bank of Canada in the early 1990s, when the high public debt and deficit situation hindered its scope for easing monetary conditions (Clinton and Zelmer, 1997).

The fiscal position of emerging market countries generally strengthened ahead of their transition to inflation targeting, whereas that of industrial countries improved after its adoption.13 Net government debt to GDP declined prior to the beginning of the transition to inflation targeting for the emerging market countries, with the notable exception of Brazil. In contrast, for the industrial countries, government debt rose prior to inflation targeting and structural fiscal balances generally worsened. This discrepancy may reflect the need for a stronger signal on the part of emerging market countries that the new inflation targeting framework will not be threatened by a weak fiscal position, especially as emerging market countries often have higher levels of domestic debt (Appendix I).

Exchange rate stability is also essential for the successful operation of inflation targeting. In this context, exchange rate stability can be defined as a policy framework with an exchange rate value credible enough to convince markets that the inflation target will not be threatened by a currency crisis. The adoption of inflation targeting by most emerging market countries followed several years of sound policies and exchange rate stability. An exception with regard to exchange rate stability is Brazil, which in 1999 weathered pressures on its currency with international support. The European industrial countries adopted inflation targeting shortly after the crisis in the Exchange Rate Mechanism (ERM) of the European Monetary System, suggesting that markets felt that their exchange rates were close enough to equilibrium and policies sufficiently supportive for a credible inflation target.

Financial system stability, as gauged by a lack of financial sector crises for several years, preceded the adoption of inflation targeting by emerging market countries but not by all of the inflation targeting industrial countries. A threat to the financial system may undermine the credibility of an inflation target by raising the possibility that an inflationary liquidity injection might be needed to prop up ailing financial institutions and can limit the scope for a tightening of policy to stabilize the exchange rate. Finland, New Zealand, and Sweden experienced financial sector crises a few years prior to the introduction of inflation targeting (Caprio and Klingebiel, 1996). This pattern suggests that emerging market countries may feel obliged to wait longer after a financial crisis than do industrial countries to ensure that the new inflation targeting framework will not be threatened by financial system instability. If an exchange rate peg is being abandoned, measures might be needed to reduce the vulnerability of the financial sector to exchange rate depreciation. In addition, many of the emerging market countries have taken measures to deepen and broaden capital markets to reduce potentially destabilizing asset price volatility.

Long-Run Inflation Objective

The choice of the long-run inflation objective appears to depend on the extent of upward bias in the target price index and on the degree of rigidities in the economy. The optimal long-term inflation target for inflation targeting countries remains a matter of debate. Akerlof and others (1996) recommend a target rate of around 3 percent on the grounds that there is a significant positive bias in the measurement of consumer price inflation and a large degree of downward wage rigidity. This target also reflects the belief that it is important to allow real interest rates to become negative at troughs in the economic cycle.14 A lower long-run inflation rate could be appropriate if the measurement bias is small and wages are flexible, but there is a broad consensus that a zero target is too low. Thus, in practice the range of long-run inflation rates used in industrial countries (i.e., 0 to 3 percent) is not very wide.

Technical uncertainties about the appropriate long-run target rate of inflation might be more acute for an emerging market country than for an industrialized country. Upward bias in the consumer price data can be accentuated by relatively limited data collection and by the importance of quality enhancement (Clinton, 2000). In addition, the more rapid pace of structural change means that less is known about the productivity growth rate and the degree of wage flexibility that underlie the bias. Chile, the Czech Republic, Israel, and Poland have signaled their aim to achieve a long-run inflation rate similar to that of their trading partners.

Cited By

Within Same Series

Other IMF Content

Other Publishers Content

Cover Adopting Inflation Targeting
Adopting Inflation Targeting
Practical Issues for Emerging Market Countries
Author: Mr. Mark Zelmer and Ms. Andrea Schaechter
ISBN:
9781557759917
ISSN:
0251-6365
Publication Date:
20 Dec 2000
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781557759917.084
Pages:
62

  • Agénor, Pierre-Richard, C. John McDermott, and Eswar S. Prasad, 1999, “Macroeconomic Fluctuations in Developing Countries: Some Stylized Facts,” IMF Working Paper 99/35 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Akerlof, George A., William T. Dickens, and George L. Perry, 1996, “The Macroeconomics of Low Inflation,” Brookings Papers on Economic Activity: 1, Brookings Institution.

    • Search Google Scholar
    • Export Citation

  • Alexander, William E., Tomás J. T. Baliño, Charles Enoch, Francesco Caramazza, George Iden, David Marston, Johannes Mueller, Ceyla Pazarbasioglu, Marc Quintyn, Matthew Saal, and Gabriel Sensenbrenner, 1995, The Adoption of Indirect Instruments of Monetary Policy, IMF Occasional Paper No. 126 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Allen, William A., 1999, “Inflation Targeting: The British Experience,” Bank of England Handbooks in Central Banking Lecture Series No. 1 (London: Bank of England).

    • Search Google Scholar
    • Export Citation

  • Andrés, Javier, Ricardo, Mestre, and Javier Vallés, 1998, “A Structural Model for the Analysis of the Monetary Policy Transmission Mechanism,” in Monetary Policy and Inflation in Spain, ed. by José Luis Malo de Molina, José Vinals, and Fernando Gutiárrez (New York: St. Martin’s Press).

    • Search Google Scholar
    • Export Citation

  • Armour, Jamie, and Agathe Coteé, 2000, “Feedback Rules for Inflation Control: An Overview of Recent Literature,” Bank of Canada Review (Winter 1999–2000), pp. 43–54.

    • Search Google Scholar
    • Export Citation

  • Aninat, Eduardo, 2000, “Closing Remarks,” paper presented at the High-Level Seminar at the IMF: Implementing Inflation Targets, Washington, March, Available via the Internet: www.imf.org/external/pubs/ft/seminar/2000/targets/index.htm

    • Search Google Scholar
    • Export Citation

  • Archer, David, 2000, “Inflation Targeting in New Zealand,” paper presented at the High-Level Seminar at the IMF: Implementing Inflation Targets, Washington, March. Available via the Internet: www.imf.org/external/pubs/ft/seminar/2000/targets/index.htm

    • Search Google Scholar
    • Export Citation

  • Ayuso, Juan, and José Luis Escrivá, 1998, “Trends in the Monetary Policy Strategy in Spain,” in Monetary Policy and Inflation in Spain, ed. by José Luis Malo de Molina, José, Viñals, and Fernando Gutiérrez (New York: St. Martin’s Press).

    • Search Google Scholar
    • Export Citation

  • Aziz, Jahangir, Francesco Caramazza, and Ranil Salgado, 2000, “Currency Crises—In Search of Common Elements,” IMF Working Paper 2000/67 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Ball, Laurence, 1999, “Policy Rules for Open Economies,” in Monetary Policy Rules, ed. by John B. Taylor (Chicago: University of Chicago Press).

    • Search Google Scholar
    • Export Citation

  • Banco Central do Brasil Monetary Policy Committee, 1999, Inflation Report (Brasilia, December).

  • Banco Central do Brasil, 2000, Inflation Report. Available via the Internet: www.bcb.gov.br/ingles/relinf/frmdef.asp

  • Bank for International Settlements, 1999, Annual Report (Basel).

  • Bank of Canada, 1999, Monetary Policy Report (Ottawa, November).

  • Bank of England, 1997, Quarterly Bulletin (London, August).

  • Bank of England, 1999. Inflation Report (London, November).

  • Bank of Israel, 1999, Inflation Report (Tel Aviv, January-June).

  • Bank of Israel, 2000, Recent Economic Developments, No. 89 (Tel Aviv, January).

  • Battellino, Ric. John Broadbent, and Philip Lowe, 1997, “The Implementation of Monetary Policy in Australia,” Reserve Bank of Australia Research Discussion Paper No. 9703 (Sydney: Reserve Bank of Australia).

    • Search Google Scholar
    • Export Citation

  • Beck, Thorsten, Asli Demirgüc-Kunt, and Ross Levine, 1999, “A New Database on Financial Development and Structure” World Bank Policy Research Working Paper No. 2146 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation

  • Berg, Claes, 1999, “Inflation Forecast Targeting: The Swedish Experience.” Sveriges Riksbank Quarterly Review, Vol. 3, pp. 44–70.

  • Bernanke, Ben S., Thomas Laubach. Frederic S. Mishkin, and Adam S. Posen, 1999, Inflation Targeting: Lessons from the International Experience (Princeton: Princeton University Press).

    • Search Google Scholar
    • Export Citation

  • Bertocchi, Graziella, and Michael Spagat, 1993, “Learning, Experimentation, and Monetary Policy,” Journal of Monetary Economics, Vol. 32 (August), pp. 169–83.

    • Search Google Scholar
    • Export Citation

  • Blejer, Mario I., Alain Ize, Alfredo M. Leone, and Sergio Werlang, eds., 2000, Inflation Targeting in Practice: Strategic and Operational Issues and Application to Emerging Market Economies (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Blejer. Mario I., Alfredo M. Leone, Pau Rabanal, and Gerd, Schwartz, July 2000, “Inflation Targeting in the Context of IMF-Supported Adjustment Programs” (unpublished: Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Blinder, Alan S., 1998, Central Banking in Theory and Practice (Cambridge, Massachusetts: MIT Press).

  • Bogdanski, Joel, Alexandre A. Tombini, and Sérgio Ribeiro da Costa Werlang, 2000, “Implementing Inflation Targeting in Brazil.” Available via the Internet: http://www.bcb.gov.br/ingles/public/wps/default.shtm

    • Search Google Scholar
    • Export Citation

  • Borio, Claudio E.V., 1997, “The Implementation of Monetary Policy in Industrial Countries: A Survey,” Bank for International Settlements Economics Paper No. 47 (July).

    • Search Google Scholar
    • Export Citation

  • Brainard, William, 1967, “Uncertainty and the Effectiveness of Policy,” American Economic Review, Vol. 57, pp. 411–25.

  • Brash, Donald T, 2000, “Inflation Targeting in New Zealand, 1988–2000,” paper presented at the Trans-Tasman Business Council, Melbourne, Australia, February. Available via the Internet: http://www.rbnz.govt.nz/speeches/index.html

    • Search Google Scholar
    • Export Citation

  • Calvo, Guillermo, and Carlos A. Végh, 1999, “Inflation Stabilization and BOP Crises in Developing Countries,” NBER Working Paper No. 6925 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation

  • Caprio, and Gerard, Jr., Daniela Klingebiel, 1996, “Bank Insolvencies: Cross-Country Experience,” World Bank Policy Research Working Paper No. 1620 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation

  • Carstens, Agustin G, and Alejandro G. Werner, 2000, “Mexico’s Monetary Policy Framework Under a Floating Exchange Rate Regime,” paper presented at the High-Level Seminar at the IMF: Implementing Inflation Targets, Washington, March. Available via the Internet: http://www.imf.org/external/pubs/ft/seminar/2000/targets/index.htm

    • Search Google Scholar
    • Export Citation

  • Christoffersen, Peter F, and Robert F. Weseott, 1999, “Is Poland Ready for Inflation Targeting?” IMF Working Paper 99/41 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Clifton, Eric V, 1999, “Inflation Targeting: What Is the Meaning of the Bottom of the Band?” IMF Policy Discussion Paper 99/8 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Clinton, Kevin, 2000, “Strategic Choices for Inflation Targeting in the Czech Republic,” in Inflation Targeting in Transition Economies: The Case of the Czech Republic, ed. by Warren Coats (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Clinton, Kevin, Mark Zelmer, 1997, “Constraints on the Conduct of Canadian Monetary Policy in the 1990s: Dealing with Uncertainty in Financial Markets,” Bank of Canada Technical Report No. 80 (Ottawa: Bank of Canada).

    • Search Google Scholar
    • Export Citation

  • Coats, Warren, ed., 2000, Inflation Targeting in Transition Economies: The Case of the Czech Republic (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Corbo, Vittorio, 1999, “Monetary Policy in Latin America in the 90s,” paper presented at the Third Annual Conference of the Central Bank of Chile, Santiago, Chile, September.

    • Search Google Scholar
    • Export Citation

  • Czech National Bank, 1999a, CNB Monetary Strategy, Document Approved by the Board of the CNB. Available via the Internet: http://www.cnb.cz/en/_mpolitika/dms.htm

    • Search Google Scholar
    • Export Citation

  • Czech National Bank, 1999b, Inflation Report (October).

  • Czech National Bank, 1999c. Inflation Targeting in the Czech Republic (December), http://www.cnb.cz/en/index.html

  • Czech National Bank, 2000, Monetary Policy in the Czech Republic. Available via the Internet: http://www.cnb.cz/en/_mpolitika/mon_policy-instr.htm

    • Search Google Scholar
    • Export Citation

  • Debelle, Guy, 1997, “Inflation Targeting in Practice.” IMF Working Paper 97/35 (Washington: International Monetary Fund).

  • Debelle, Guy, Stanley Fischer, 1994 “How Independent Should a Central Bank Be?” in Goals, Guidelines, and Constraints Facing Monetary Policymakers, ed. by Jeffrey C. Fuhrer, Federal Reserve Bank of Boston Conference Series No. 38 (U.S. Federal Reserve).

    • Search Google Scholar
    • Export Citation

  • Dehelle, Guy, and Glenn Stevens, 1995, “Monetary Policy Goals for Inflation in Australia,” Reserve Bank of Australia Research Discussion Paper No. 9503 (Sydney: Reserve Bank of Australia).

    • Search Google Scholar
    • Export Citation

  • De Fiore, Fiorella, 1998, “The Transmission of Monetary Policy in Israel.” IMF Working Paper 98/114 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Drew, Aaron, and Ben Hunt, 1998, “The Forecasting and Policy System: Preparing Economic Projections,” Reserve Bank of New Zealand Discussion Paper No. G98/7 (Wellington: Reserve Bank of New Zealand).

    • Search Google Scholar
    • Export Citation

  • Edey, Malcolm, 1997. “The Debate on Alternatives for Monetary Policy in Australia.” in Monetary Policy and Inflation Targeting, Proceedings of a Conference, ed. by Philip Lowe (Sydney: Reserve Bank of Australia).

    • Search Google Scholar
    • Export Citation

  • Fajgenbaum, José, Michael Nowak, Trevor Alleyne, Arvind Subramanian, Gunnar Jonsson, and Michael Sarel, 2000, “South Africa: Selected Issues,” IMF Staff Country Report No. 00/42 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Fillion, Jean François, and André Léonard, 1997, “La Courbe de Phillips au Canada: Un Examen de Quelques Hypotheses.” Bank of Canada Working Paper No. 97–3 (Ottawa: Bank of Canada).

    • Search Google Scholar
    • Export Citation

  • Fischer, Stanley, 1994, “Modern Central Banking.” paper presented at the Bank of England’s Tercentenary Celebration, London, June.

    • Search Google Scholar
    • Export Citation

  • Fischer, Stanley, 1995, “Central Bank Independence Revisited.” American Economic Review, Papers and Proceedings, Vol. 85, pp. 201–06.

    • Search Google Scholar
    • Export Citation

  • Fortin, Pierre, 1996, “The Great Canadian Slump.” Canadian Journal of Economics, Vol. 29, No. 4, pp. 761–787.

  • Fraga, Arminio, 2000, “Monetary Policy During the Transition to a Floating Exchange Rate: Brazil’s Recent Experience,” Finance & Development. Vol, 37 (March), pp. 16–18.

    • Search Google Scholar
    • Export Citation

  • Freedman, Charles, 1994. “The Use of Indicators and of the Monetary Conditions Index in Canada,” in Frameworks for Monetary Stability: Policy Issues and Country Experiences, ed. by Tomás J. T. Baliño and Carlo Cottarelli (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Freedman, Charles, 2000, “Inflation Targeting in Canada.” paper presented at the High-Level Seminar at the IMF: Implementing Inflation Targets, Washington. March. Available via the Internet: http://www.imf.org/external/pubs/ft/seminar/2000/targets/index.htm

    • Search Google Scholar
    • Export Citation

  • Fry, Maxwell, DeAnne Julius, Lavan Mahadeva, Sandra, Roger, and Gabriel Sterne, 2000, “Key Issues in the Choice of Monetary Policy Framework,” in Monetary Frameworks in a Global Context, ed. by Lavan Mahadeva and Gabriel Sterne (London: Routledge).

    • Search Google Scholar
    • Export Citation

  • Gutiárrez, Fernando, 1998, “Monetary Policy Following the Law on the Autonomy of the Banco de Espana,” in Monetary Policy and Inflation in Spain, ed. by José Luis Malo de Molina, Josá Viñals, and Fernando Gutiárrez (New York: St. Martin’s Press).

    • Search Google Scholar
    • Export Citation

  • Haldane, Andrew, 2000, “Targeting Inflation: The U.K. in Retrospect,” in Inflation Targeting in Practice: Strategic and Operational Issues and Application to Emerging Market Economies, ed. by Mario I. Blejer, Alain Ize, Alfredo M. Leone, and Sergio Werlang (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Haldane, Andrew, ed., 1995, Targeting Inflation: A Conference of Central Banks on the Use of Inflation Targets Organized by the Bank of England 9–10 March 1995 (London: Bank of England).

    • Search Google Scholar
    • Export Citation

  • Heikensten, Lars, 1999, “The Riksbank’s Inflation Target-Clarification and Evaluation,” Sveriges Riksbank Quarterly Bulletin, Vol. 1, pp. 5–17.

    • Search Google Scholar
    • Export Citation

  • Heikensten, Lars, and Anders Vredin, 1998, “Inflation Targeting and Swedish Monetary Policy: Experience and Problems,” Sveriges Riksbank Quarterly Review, Vol. 4, pp. 5–33.

    • Search Google Scholar
    • Export Citation

  • Hunt, Ben, 1999, “Inter-Forecast Monetary Policy Implementation: Fixed-Instrument Versus MCl-Based Strategies,” Reserve Bank of New Zealand Discussion Paper No. G99/1 (Wellington: Reserve Bank of New Zealand).

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, 1998a, Chile—Selected issues. IMF Staff Country Report No. 98/26 (Washington).

  • International Monetary Fund, 1998b, Czech Republic—Selected Issues. IMF Staff Country Report No. 98/36 (Washington).

  • International Monetary Fund, 1998c, World Economic Outlook, May 1998: A Survey by the Staff of the International Monetary Fund. World Economic and Financial Surveys (Washington).

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, 1999a, Republic of Poland—Staff Report for the 1998 Article IV Consultation. IMF SM/00/36. February 17 (Washington).

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, 1999b, Monetary and Exchange Affairs Department, Country Experiences with the Use and Liberalization of Capital Controls, IMF SM/99/214. Revision I, including supplements (Washington).

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, 2000, Monetary and Exchange Affairs Department. “Supporting Document to the Code of Good Practices on Transparency in Monetary and Financial Policies” (Washington). Available via the Internet: www.imf.org/external/np/mae/mft/sup/index.htm

    • Search Google Scholar
    • Export Citation

  • Isard, Peter, and Douglas Laxton, 2000a, “Inflation-Forecast Targeting and the Role of Macroeconomic Models.” in Inflation Targeting in Transition Economies: The Case of the Czech Republic, ed. by Warren Coats (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Isard, Peter, and Douglas Laxton, 2000b, “Issues Related to Inflation Targeting and the Bank of England’s Framework,” in United Kingdom—Selected Issues, IMF Staff Country Report No. 99/44 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Isard, Peter, and Douglas Laxton, and Ann-Charlotte Eliasson, 2000, “Simple Monetary Policy Rules under Model Uncertainty,” in International Finance and Financial Crises: Essays in Honor of Robert P. Flood, Jr., ed. by Peter Isard, Assaf Razin, and Andrew K. Rose (Boston: Kluwer Academic; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Johnson, David, 1998,” The Credibility of Monetary Policy: International Evidence Based on Surveys of Expected Inflation,” in Price Stability, Inflation Targets, and Monetary Policy: Proceedings of a Conference Held by the Bank of Canada, May 1997 (Ottawa: Bank of Canada).

    • Search Google Scholar
    • Export Citation

  • Jonsson, Gunnar, 1999, “Relative Merits and Implications of Inflation Targeting for South Africa,” IMF Working Paper No. 99/116 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Kent, C., and Philip Lowe, 1998, “Property Price Cycles and Monetary Policy,” in The Role of Asset Prices in the Formulation of Monetary Policy, Bank for International Settlements Conference Paper No. 5 (Basel: BIS).

    • Search Google Scholar
    • Export Citation

  • King, Mervyn, 1997. “The Inflation Target Five Years On,” Bank of England Quarterly Bulletin, Vol. 37 (April), pp. 434–42.

  • Kouparitsas, Michael A., 1996, “North-South Business Cycles,” Federal Reserve Bank of Chicago Working Paper No. 96–9 (U.S. Federal Reserve).

    • Search Google Scholar
    • Export Citation

  • Kumhoff, Michael, 2000, “Inflation Targeting Under Imperfect Credibility” (unpublished; Stanford: Stanford University).

  • Landerretche, Oscar, Felipe Morandé, and Klaus Schmidt-Hebbel. 1999, “Inflation Targets and Stabilization in Chile,” Central Bank of Chile Working Paper No. 55 (Santiago: Central Bank of Chile).

    • Search Google Scholar
    • Export Citation

  • Lane, Timothy D., Atish Ghosh, Javier Hamann, Steven Phillips, Marianne Schulze-Ghattas, and Tsidi Tsikata., 1999, IMF-Supported Programs in Indonesia, Korea and Thailand: A Preliminary Assessment, IMF Occasional Paper No. 178 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Leiderman, Leonardo, and Hadas Bar-Or, 2000, “Monetary Policy Rules and Transmission Mechanisms Under Inflation Targeting in Israel” (unpublished; Jerusalem, Research Department Bank of Israel).

    • Search Google Scholar
    • Export Citation

  • Leiderman, Leonardo, and Gil Bufman, 2000, “Inflation Targeting Under a Crawling Band Exchange Rate Regime: Lessons from Israel,” in Inflation Targeting in Practice: Strategic and Operational Issues and Application to Emerging Market Economies, ed. by Mario I. Blejer, Alain Ize, Alfredo M. Leone, and Sergio Werlang (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Leiderman, Leonardo, and Lars E.O. Svensson, eds., 1995, Inflation Targets (London: Centre for Economic Policy Research).

  • Leone, Alfredo M., 1999, “Inflation Targeting in the Brazilian Setting,” in Brazil—Selected Issues and Statistical Appendix, IMF Country Staff Report No. 99/97 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Lowe, Philip, 1997, “Monetary Policy and Inflation Targeting,” in Reserve Bank of Australia Bulletin. October, pp. 14–19.

  • Manuel, Trevor A., 2000, “Budget Speech 2000 by Trevor A. Manuel, Minister of Finance” (February 23, 2000). Available via the Internet: www.gov.za

    • Search Google Scholar
    • Export Citation

  • Masson, Paul R., Miguel A. Savastano, and Sunil Sharma, 1997, “The Scope for Inflation Targeting in Developing Countries,” IMF Working Paper 97/130 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Mboweni, Tito T., 1999a, “Abridged Actual Address by Mr. Tito T. Mboweni, Governor of the South African Reserve Bank, at the Seventy-Ninth Ordinary General Meeting of Shareholders of the Bank, 24 August 1999.” Available via the Internet: http://www.resbank.co.za/Address/annual/abridged.html

    • Search Google Scholar
    • Export Citation

  • Mboweni, Tito T., 1999b, “Inflation Targeting in South Africa,” address presented by T.T. Mboweni, Governor of the South African Reserve Bank, at the biennial Congress of the Economic Society of South Africa, Pretoria, September. Available via the Internet: http://www.resbank.co.za/Address/1999/ad060999.htm

    • Search Google Scholar
    • Export Citation

  • Mboweni, Tito T., 2000, “A New Monetary Policy Framework,” statement issued by Mr. T.T. Mboweni, Governor of the South African Reserve Bank, as an Appendix to the “Statement of the Monetary Policy Committee–6 April 2000.” Available via the Internet: http://www.resbank.co.za/Media/2000/st06042000.html

    • Search Google Scholar
    • Export Citation

  • Menon, Jayant, 1995, “Exchange Rate Pass-Through,” Journal of Economic Surveys, Vol. 9 (June), pp. 197–231.

  • Mishkin, Frederic S., 2000, “Inflation Targeting in Emerging Market Countries,” NBER Working Paper No. 7618 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation

  • Morandé, Felipe, and Klaus Schmidt-Hebbel, 2000, “Monetary Policy and Inflation Targeting in Chile,” in Inflation Targeting in Practice: Strategic and Operational Issues and Application to Emerging Market Economies, ed. by Mario I. Blejer, Alain Ize, Alfredo M. Leone, and Sergio Werlang (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Murray, John, Mark Zelmer, and Zahir Antia, 2000, “International Financial Crises & Flexible Exchange Rates: Some Lessons from Canada,” Bank of Canada Technical Report No. 88 (Ottawa: Bank of Canada).

    • Search Google Scholar
    • Export Citation

  • Mussa, Michael, and Miguel A. Savastano, 1999, “The IMF Approach to Economic Stabilization,” IMF Working Paper 99/104 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • National Bank of Poland, 1998, Medium-Term Strategy of Monetary Policy, 1999–2003 (Warsaw).

  • National Bank of Poland, 1999a, Monetary Policy Council, Inflation Report (III Quarter) (Warsaw).

  • National Bank of Poland, 1999b, Inflation Report 1998 (Warsaw).

  • National Bank of Poland, 1999c, Inflation Report 1999, I-II Quarter (Warsaw).

  • Offenbacher, Akiva, 1996, “How Inflation Has Come Down,” Central Banking, Vol. VII (March), pp. 61–66.

  • Orphanides, Alhanasios, 1998, “Monetary Policy Rules Based on Real-Time Data,” Finance and Economics Discussion Series No. 1998–03 (Washington: Board of Governors of the Federal Reserve System).

    • Search Google Scholar
    • Export Citation

  • Pikkarainen, Pentti, 1996, “Some Perspectives on the Principles of Monetary Policy with a Floating Markka,” Bank of Finland Bulletin, Vol. 70 (August), pp. 3–6.

    • Search Google Scholar
    • Export Citation

  • Pikkarainen, Pentti,, and Timo Tyväinen, 1993, “The Bank of Finland’s Inflation Target and the Outlook for Inflation Over the Next Few Years,” Bank of Finland Bulletin, Vol. 67, No. 6–7 (June-July), pp. 6–7.

    • Search Google Scholar
    • Export Citation

  • Price, Robert, 1997, “The Rationale and Design of Inflation-Indexed Bonds,” IMF Working Paper 97/12 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Reserve Bank of Australia, 1994, “Measuring ‘Underlying’ Inflation,” Reserve Bank of Australia Bulletin (August), pp. 1–6.

  • Reserve Bank of Australia, 1996, “Statement on the Conduct of Monetary Policy by the Treasurer and the Governor (designate) of the Reserve Bank,” issued August 14. Available via the Internet: http://www.rba.gov.au/about/ab_scmp.html

    • Search Google Scholar
    • Export Citation

  • Reserve Bank of Australia, 1999,“Semi-Annual Monetary Policy Statement” in Reserve Bank of Australia Quarterly Bulletin (November), pp. 1–45.

    • Search Google Scholar
    • Export Citation

  • Reserve Bank of New Zealand, 1999, Monetary Policy Statement (December). Available via the Internet: http://www.rbnz.govt.nz/monpol/statements/0094172.html

    • Search Google Scholar
    • Export Citation

  • Rodgers, Peter, 1998, “The Bank of England Act,” Bank of England Quarterly Bulletin, Vol. 38 (May), pp. 93–99.

  • Roger, Scott, 1998, “Core Inflation: Concepts, Uses and Measurement,” Reserve Bank of New Zealand Discussion Paper No. G98/9:1-41 (Wellington: Reserve Bank of New Zealand).

    • Search Google Scholar
    • Export Citation

  • Schadler, Susan, Adam Benneti, Maria Carkovic, Louis Dicks-Mireaux, Mauro Mecagni, James H. J. Morsink, and Miguel A. Savastano, 1995,IMF Conditionality: Experiences Under Stand-By and Extended Arrangements, IMF Occasional Paper No. 128 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Sherwin, Murray, 2000, “Strategic Choices in Inflation Targeting: The New Zealand Experience,” in Inflation Targeting in Practice: Strategic and Operational Issues and Application to Emerging Market Economies, ed. by Mario I. Blejer, Alain Ize, Alfredo M. Leone, and Sergio Werlang (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Söderlind, Paul, and Lars E.O. Svensson, 1997, “New Techniques to Extract Market Expectations from Financial Instruments,” NBER Working Paper No. 5877 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation

  • Stals, Chris, 1999, “Inflation Targeting as an Anchor for Monetary Policy in South Africa,” address by the Governor of the South African Reserve Bank al a Breakfast Meeting of the Johannesburg Branch of the Institute of Bankers in South Africa, March 17, 1999. Available via the Internet: http://www.resbank.co.za/Address/1999/ad 170399.html

    • Search Google Scholar
    • Export Citation

  • Stone, Mark R., 2000, “The Corporate Sector Dynamics of Systemic Financial Crises,” IMF Working Paper 00/114 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Summers, Lawrence, 1991, “Panel Discussion: Price Stability; How Should Long-Term Monetary Policy Be Determined?” Journal of Money, Credit and Banking, Vol. 23 (August), pp. 625–31.

    • Search Google Scholar
    • Export Citation

  • Svensson, Lars E.O., 1997, “Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets,” European Economic Review, Vol.41 (June), pp. 1111–46.

    • Search Google Scholar
    • Export Citation

  • Svensson, Lars E.O., 1998, “Open-Economy Inflation Targeting,” NBER Working Paper No. 6545 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation

  • Sveriges Riksbank, 1999, Inflation Report (Stockholm).

  • Taylor, John B., ed., 1999, Monetary Policy Rules (Chicago: University of Chicago Press).

  • Thiessen, Gordon G., 1998, “The Canadian Experience with Targets for Inflation Control,” Gibson Lecture at Queen’s University, Kingston, Ontario, Canada, October.

    • Search Google Scholar
    • Export Citation

  • Tyrväinen, Timo, 1997, “Have the Dynamics of Finnish Inflation Changed?” Bank of Finland Bulletin, Vol. 71 (August), pp. 3–7.

  • Ugolini, Piero, 1996, “Crawling Exchange Rate Bands Under Moderate Inflation,” MAE Operational Paper No. 96/4 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Van’t dack, Joseph, 1999, “Monetary Policy Operating Procedures in Emerging Market Economies,” Bank for International Settlements Policy Paper No. 5 (Basel: BIS).

    • Search Google Scholar
    • Export Citation

  • Vega, Juan Luis, 1998, “The ALP Long-Run Demand Function,” in Monetary Policy and Inflation in Spain, ed. by José Luis Malo de Molina, José Viñals, and Fernando Gutiérrez (New York: St, Martin’s Press).

    • Search Google Scholar
    • Export Citation

  • Walsh, Carl E., 1995, “Optimal Contracts for Central Bankers,” American Economic Review, Vol. 85 (March), pp, 150–67.

  • Werlang, Sérgio, 2000, “Issues in the Adoption of an Inflation Targeting Framework in Brazil,” paper presented at the High-Level Seminar at the IMF: Implementing Inflation Targets, Washington, March. Available via the Internet: http://www.imf.org/external/pubs/ft/seminar/2000/targets/index.htm

    • Search Google Scholar
    • Export Citation

  • Zelmer, Mark, 1996, “Strategy versus Tactics,” in Money Markets and Central Bank Operations: Proceedings of a Conference,Bank of Canada, November 1995 (Ottawa: Bank of Canada).

    • Search Google Scholar
    • Export Citation