Monetary Regime Switch From Exchange Rate To Inflation Targeting

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Monetary-Regime Switch from Exchange-Rate to Inflation Targeting

Author : Marjan Petreski
Publisher : LAP Lambert Academic Publishing
ISBN 13 : 9783845401546
Total Pages : 300 pages
Book Rating : 4.4/5 (15 download)

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Book Synopsis Monetary-Regime Switch from Exchange-Rate to Inflation Targeting by : Marjan Petreski

Download or read book Monetary-Regime Switch from Exchange-Rate to Inflation Targeting written by Marjan Petreski and published by LAP Lambert Academic Publishing. This book was released on 2011-06 with total page 300 pages. Available in PDF, EPUB and Kindle. Book excerpt: The study investigates whether a switch from exchange-rate targeting to inflation targeting will facilitate a more appropriate monetary policy and a more stable macroeconomic environment in developing economies. The research finds that the exchange-rate regime is not significant in explaining growth. The empirical evidence on its effect on output volatility suggests that a terms-of-trade shock larger than seven percentage points under a fixed exchange-rate regime will give higher output volatility compared to a float. Given these findings, the study suggests the exchange rate be made flexible and that the direct targeting of inflation is a rational choice in the aftermath of peg exit. To investigate whether monetary-policy responses change under such a regime switching, allowing for the possibility of an endogenous switch, the study estimates augmented Taylor rule with two approaches: a panel switching regression; and a Markov-switching VAR. Results from both suggest that inflation targeting represented a real switch in developing economies.

Inflation Targeting and Exchange Rate Management In Less Developed Countries

Author : Mr.Marco Airaudo
Publisher : International Monetary Fund
ISBN 13 : 1475523165
Total Pages : 65 pages
Book Rating : 4.4/5 (755 download)

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Book Synopsis Inflation Targeting and Exchange Rate Management In Less Developed Countries by : Mr.Marco Airaudo

Download or read book Inflation Targeting and Exchange Rate Management In Less Developed Countries written by Mr.Marco Airaudo and published by International Monetary Fund. This book was released on 2016-03-08 with total page 65 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze coordination of monetary and exchange rate policy in a two-sector model of a small open economy featuring imperfect substitution between domestic and foreign financial assets. Our central finding is that management of the exchange rate greatly enhances the efficacy of inflation targeting. In a flexible exchange rate system, inflation targeting incurs a high risk of indeterminacy where macroeconomic fluctuations can be driven by self-fulfilling expectations. Moreover, small inflation shocks may escalate into much larger increases in inflation ex post. Both problems disappear when the central bank leans heavily against the wind in a managed float.

Monetary-regime switch from exchange-rate targeting to inflation targeting

Author : Marjan Petreski
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (14 download)

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Book Synopsis Monetary-regime switch from exchange-rate targeting to inflation targeting by : Marjan Petreski

Download or read book Monetary-regime switch from exchange-rate targeting to inflation targeting written by Marjan Petreski and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

The Role of the Exchange Rate in Inflation-Targeting Emerging Economies

Author : Anna Nordstrom
Publisher : International Monetary Fund
ISBN 13 : 1589067967
Total Pages : 106 pages
Book Rating : 4.5/5 (89 download)

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Book Synopsis The Role of the Exchange Rate in Inflation-Targeting Emerging Economies by : Anna Nordstrom

Download or read book The Role of the Exchange Rate in Inflation-Targeting Emerging Economies written by Anna Nordstrom and published by International Monetary Fund. This book was released on 2009-11-24 with total page 106 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores the role of exchange rates in emerging economies with inflation-targeting regimes, an issue that has become especially germane during the current episode of financial turmoil and volatile capital flows. Under inflation targeting, the interest rate is the main monetary policy tool for influencing activity and inflation, and there is little agreement about the appropriate role of the exchange rate.The exchange rate is a more important monetary policy tool for emerging economies that have adopted inflation targeting than it is for inflation-targeting advanced economies. Inflation-targeting emerging economies generally have less flexible exchange rate arrangements and intervene more frequently in the foreign exchange market than their advanced economy counterparts. The enhanced role of the exchange rate reflects these economies' greater vulnerability to exchange rate shocks and their less developed financial markets. However, their sharper focus on the exchange rate may cause some confusion about the commitment of their central banks to achieve the inflation target and may also complicate policy implementation. Global inflation pressures, greater exchange rate volatility, and the financial stresses from the global financial turmoil that began in mid-2007 are heightening these tensions.

Moving to a Flexible Exchange Rate

Author : Mrs.Gilda Fernandez
Publisher : International Monetary Fund
ISBN 13 : 1589064763
Total Pages : 29 pages
Book Rating : 4.5/5 (89 download)

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Book Synopsis Moving to a Flexible Exchange Rate by : Mrs.Gilda Fernandez

Download or read book Moving to a Flexible Exchange Rate written by Mrs.Gilda Fernandez and published by International Monetary Fund. This book was released on 2006-01-09 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: A growing number of countries are adopting flexible exchange rate regimes because flexibility offers more protection against external shocks and greater monetary independence. Other countries have made the transition under disorderly conditions, with the sharp depreciation of their currency during a crisis. Regardless of the reason for adopting a flexible exchange rate, a successful transition depends on the effective management of a number of institutional and operational issues. The authors of this Economic Issue describe the necessary ingredients for moving to a flexible regime, as well as the optimal pace and sequencing under different conditions.

Monetary Policy Under Flexible Exchange Rates

Author : Pierre-Richard Agénor
Publisher : World Bank Publications
ISBN 13 :
Total Pages : 100 pages
Book Rating : 4./5 ( download)

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Book Synopsis Monetary Policy Under Flexible Exchange Rates by : Pierre-Richard Agénor

Download or read book Monetary Policy Under Flexible Exchange Rates written by Pierre-Richard Agénor and published by World Bank Publications. This book was released on 2000 with total page 100 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the past few years, a number of central banks have adopted inflation targeting for monetary policy. The author provides an introduction to inflation targeting, with an emphasis on analytical issues, and the recent experience of middle- and high-income developing countries (which have relatively low inflation to begin with, and reasonably well-functioning financial markets). After presenting a formal analytical framework, the author discusses the basic requirements for inflation targeting, and how such a regime differs from money, and exchange rate targeting regimes. After discussing the operational framework for inflation targeting (including the price index to monitor the time horizon, the forecasting procedures, and the role of asset prices), he examines recent experiences with inflation targets, providing new evidence on the convexity of the Phillips curve for six developing countries. His conclusions: Inflation targeting is a flexible policy framework that allows a country's central bank to exercise some degree of discretion, without putting in jeopardy its main objective of maintaining stable prices. In middle- and high-income developing economies that can refrain from implicit exchange rate targeting, it can improve the design, and performance of monetary policy, compared with other policy approaches that central banks may follow. Not all countries may be able to satisfy the technical requirements (such as adequate price data, adequate understanding of the links between instruments, and targets of monetary policy, and adequate forecasting capabilities), but such requirements should not be overstated. Forecasting capability can never be perfect, and sensible projections always involve qualitative judgment. More important, and often more difficult, is the task of designing, or improving an institutional framework that would allow the central bank to pursue the goal of low, stable inflation, while maintaining the ability to stabilize fluctuations in output.

Inflation Targeting Regimes

Author : Alina Carare
Publisher : International Monetary Fund
ISBN 13 :
Total Pages : 44 pages
Book Rating : 4.:/5 (318 download)

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Book Synopsis Inflation Targeting Regimes by : Alina Carare

Download or read book Inflation Targeting Regimes written by Alina Carare and published by International Monetary Fund. This book was released on 2003 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

The Transmission Mechanism in Armenia

Author : International Monetary Fund
Publisher : International Monetary Fund
ISBN 13 : 1455210773
Total Pages : 33 pages
Book Rating : 4.4/5 (552 download)

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Book Synopsis The Transmission Mechanism in Armenia by : International Monetary Fund

Download or read book The Transmission Mechanism in Armenia written by International Monetary Fund and published by International Monetary Fund. This book was released on 2010-11-01 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: The introduction of inflation targeting in 2006, together with important economic developments such as dedollarization, marked the beginning of a new macroeconomic framework in Armenia, which is likely to have changed the effectiveness of monetary policy. This paper is the first attempt to analyze whether the transmission mechanism in Armenia has been subject to a structural break by employing a Markov-Switching VAR framework. Results support the existence of such a structural break around the time inflation targeting was introduced and reduced levels of dollarization were observed. Results from introducing a threshold variable into this framework furthermore show that reduced levels of dollarization are an important determinant of the effectiveness of monetary policy.

Macroeconomic Implications of the Transition to Inflation Targeting and Capital Account Liberalization in Romania

Author : Nikolay Gueorguiev
Publisher : International Monetary Fund
ISBN 13 : 1451875592
Total Pages : 37 pages
Book Rating : 4.4/5 (518 download)

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Book Synopsis Macroeconomic Implications of the Transition to Inflation Targeting and Capital Account Liberalization in Romania by : Nikolay Gueorguiev

Download or read book Macroeconomic Implications of the Transition to Inflation Targeting and Capital Account Liberalization in Romania written by Nikolay Gueorguiev and published by International Monetary Fund. This book was released on 2004-12-01 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the near future, Romania will introduce inflation targeting and fully liberalize its capital account. This paper aims to analyze, in a dynamic general-equilibrium model with sticky prices and monopolistic competition, how these two profound changes will affect the ability of monetary policy to pursue its objective of price stability. In particular, the resilience of the current and future monetary policy regimes to shocks is evaluated against two welfare criteria: a standard central bank loss function containing the deviations of inflation, output, and the real exchange rate from their equilibrium values, and the compensating variation measure of Lucas (1987).

Exchange Rate Regimes in Selected Advanced Transition Economies

Author : International Monetary Fund
Publisher : International Monetary Fund
ISBN 13 : 1451974116
Total Pages : 26 pages
Book Rating : 4.4/5 (519 download)

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Book Synopsis Exchange Rate Regimes in Selected Advanced Transition Economies by : International Monetary Fund

Download or read book Exchange Rate Regimes in Selected Advanced Transition Economies written by International Monetary Fund and published by International Monetary Fund. This book was released on 2000-04-01 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: Since beginning economic transition, the Czech Republic, Estonia, Hungary, Poland, and Slovenia have—with much success—employed diverse exchange rate regimes. As these countries approach EU accession, they will need to avoid the perils of too much or too little exchange rate variability when capital flows are likely to be large and volatile; narrow band arrangements in particular could be problematic. The exception is Estonia, where there are good arguments for retaining the currency board arrangement. Countries wishing to join the euro area at an early stage should not leave the removal of remaining capital controls to the last minute.

Exchange Rate Policy and Monetary Strategy Options in the Philippines

Author : Aerdt G. F. J. Houben
Publisher : International Monetary Fund
ISBN 13 : 1451973349
Total Pages : 36 pages
Book Rating : 4.4/5 (519 download)

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Book Synopsis Exchange Rate Policy and Monetary Strategy Options in the Philippines by : Aerdt G. F. J. Houben

Download or read book Exchange Rate Policy and Monetary Strategy Options in the Philippines written by Aerdt G. F. J. Houben and published by International Monetary Fund. This book was released on 1997-05-01 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper evaluates the Philippines’ experience with different exchange regimes since 1970. It argues that the shift to a flexible regime was crucial to restoring external viability and generating an export-led economic take-off, but that mixed performance in meeting money targets and asymmetric policy reactions to exchange rate pressures have resulted in an uneven inflation performance. Since adoption of a firm nominal anchor for monetary policy would contribute to a more effective control of inflation and thereby to better prospects for sustained growth, the merits of three monetary strategy options are reviewed: stricter adherence to a money supply rule, adoption of an exchange rate peg, and a switch to direct inflation targeting.

Current Issues in the Design and Conduct of Monetary Policy

Author : Mr.Mohsin S. Khan
Publisher : International Monetary Fund
ISBN 13 : 1451847726
Total Pages : 19 pages
Book Rating : 4.4/5 (518 download)

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Book Synopsis Current Issues in the Design and Conduct of Monetary Policy by : Mr.Mohsin S. Khan

Download or read book Current Issues in the Design and Conduct of Monetary Policy written by Mr.Mohsin S. Khan and published by International Monetary Fund. This book was released on 2003-03-01 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt: Movements in global capital during the late 1990s and the greater emphasis on price stability led many countries to abandon fixed exchange rate regimes and to design institutions and monetary policies to achieve credibility in the goal of lowering inflation. Such recent developments have brought to the forefront the idea that freely mobile capital, independent monetary policy, and fixed exchange rates form an "impossible trinity." It is possible to have two of these policies, but not all three. Inflation-targeting regimes being adopted by many countries provide a way of resolving this dilemma.

Two Targets, Two Instruments

Author : Mr.Jonathan David Ostry
Publisher : International Monetary Fund
ISBN 13 : 1475554281
Total Pages : 25 pages
Book Rating : 4.4/5 (755 download)

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Book Synopsis Two Targets, Two Instruments by : Mr.Jonathan David Ostry

Download or read book Two Targets, Two Instruments written by Mr.Jonathan David Ostry and published by International Monetary Fund. This book was released on 2012-02-29 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series replaced Staff Position Notes in January 2011.

Frontiers of Monetary Policymaking

Author : Ali Alichi
Publisher : International Monetary Fund
ISBN 13 : 1484314689
Total Pages : 44 pages
Book Rating : 4.4/5 (843 download)

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Book Synopsis Frontiers of Monetary Policymaking by : Ali Alichi

Download or read book Frontiers of Monetary Policymaking written by Ali Alichi and published by International Monetary Fund. This book was released on 2015-04-01 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper first describes how the Czech National Bank (CNB) moved gradually from a fixed exchange rate regime to the frontiers of Inflation-Forecast Targeting. It then focuses on the CNB’s recent experience in adding the exchange rate as a complementary monetary policy tool to stimulate the economy and combat the risks of deflation when the policy interest rate is at the zero lower bound. It assesses the theoretical basis of such a policy, the communications approach used by the CNB when announcing the new framework, and the effects thus far on inflation and output.

Monetary and Exchange Rate Policy of Transition Economies of Central and Eastern Europe after the Launch of EMU

Author : Mr.Paul R. Masson
Publisher : International Monetary Fund
ISBN 13 : 1451972644
Total Pages : 26 pages
Book Rating : 4.4/5 (519 download)

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Book Synopsis Monetary and Exchange Rate Policy of Transition Economies of Central and Eastern Europe after the Launch of EMU by : Mr.Paul R. Masson

Download or read book Monetary and Exchange Rate Policy of Transition Economies of Central and Eastern Europe after the Launch of EMU written by Mr.Paul R. Masson and published by International Monetary Fund. This book was released on 1999-07-01 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: The more advanced Central and Eastern European Countries (CEECs) face an evolving set of considerations in choosing their exchange rate policies. On the one hand, capital mobility is increasing, and this imposes additional constraints on fixed exchange rate regimes, while trend real appreciation makes the combination of low inflation and exchange rate stability problematic. On the other hand, the objectives of EU and eventual EMU membership make attractive a peg to the euro at some stage in the transition. The paper discusses these conflicting considerations, and considers the feasibility of an alternative monetary framework, inflation targeting.

From Fixed to Float

Author : Mrs.Gilda Fernandez
Publisher : International Monetary Fund
ISBN 13 : 1451854935
Total Pages : 40 pages
Book Rating : 4.4/5 (518 download)

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Book Synopsis From Fixed to Float by : Mrs.Gilda Fernandez

Download or read book From Fixed to Float written by Mrs.Gilda Fernandez and published by International Monetary Fund. This book was released on 2004-07-01 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper identifies the institutional and operational requisites for transitions to floating exchange rate regimes. In particular, it explores key issues underlying the transition, including developing a deep and liquid foreign exchange market, formulating intervention policies consistent with the new regime, establishing an alternative nominal anchor in the context of a new monetary policy framework, and building the capacity of market participants to manage exchange rate risks and of supervisory authorities to regulate and monitor them. It also assesses the factors that influence the pace of exit and the appropriate sequencing of exchange rate flexibility and capital account liberalization.

The Journey to Inflation Targeting

Author : Mr.Bernard Laurens
Publisher : International Monetary Fund
ISBN 13 : 151354084X
Total Pages : 44 pages
Book Rating : 4.5/5 (135 download)

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Book Synopsis The Journey to Inflation Targeting by : Mr.Bernard Laurens

Download or read book The Journey to Inflation Targeting written by Mr.Bernard Laurens and published by International Monetary Fund. This book was released on 2015-06-25 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Countries with evolving monetary regimes that decide to embark on “the Journey to inflation targeting” may not be able to adopt a full-fledged inflation targeting regime immediately. Those countries would be better off adopting transitional arrangements that take advantage of the informational content of monetary aggregates, developing an economic analysis capacity, and concentrating on monetay operations aimed at steering money market interest rates. This approach would allow the central bank to buy time for developing the building blocks for effective monetary policy, support transparent central bank communication, and limit the potential for undesirable outcomes along the road.