Inflation Targeting Regimes

Abstract

This paper classifies countries that define their monetary policy framework by an inflation target into full-fledged inflation targeters, eclectic inflation targeters and inflation targeting lite regimes. This classification is based on indicators of the clarity and credibility of the commitment to the inflation target. The three regimes can be viewed as corresponding to different welfare maximizing combinations of policy objectives, each conditional on a country''s "endowed" level of credibility. The credibility of the regimes is related empirically to structural differences. Policy implications are drawn, especially for emerging market countries aiming at full-fledged inflation targeting.Inflation targeting;Price stabilization;inflation, monetary policy, inflation target, central bank, price stability, financial stability, percent inflation, low inflation, inflation objective, inflation targeting regime, monetary regime, monetary aggregate, monetary fund, monetary policy framework, monetary framework, inflation rate, foreign exchange, open market operations, monetary economics, real interest rates, monetary objective, annual inflation, actual inflation, monetary target, monetary policy objectives, monetary program, money demand, independent monetary policy, inflation-targeting, increase in inflation, inflation performance, monetary policy frameworks, monetary policy implementation, money growth, annual inflation rate, national bank, open market operation, rates of inflation, inflationary expectations, rate of inflation, monetary instruments, monetary regimes, average inflation, effects of inflation, transitional monetary regime, inflation targeting framework, monetary policy regimes, lower inflation, variable inflation, monetary aggregate target, monetary targeting, monetary policies, actual rate of inflation, monetary aggregates, monetary stability, macroeconomic stability, monetary frameworks