Inflation-forecast targeting is state of the art for monetary policy. This book explores first principles, including managing short-term policy trade-offs. The book also outlines efficient operational procedures and reviews the experiences of Canada, the Czech Republic, and India. The analysis...

The paper presents a DGE model designed as a core projection tool to support monetary policy in inflation-targeting (IT) emerging market economies. The paper uses a particularly simple and flexible general equilibrium model structure that can be amended to account for various phenomena that...

In economies in transition, the development of financial markets is a common objective linking the monetary and fiscal authorities, while monetary and public debt management cannot be strictly separated. This calls for close coordination of objectives and instruments of monetary and debt...

This paper evaluates the performance of two alternative policy rules, a forward-looking rule and a spontaneous adjustment rule, under alternative inflation targets, in terms of output losses in a macroeconomic model, using European Union data. The simulations suggest that forward-looking rules...

This paper presents a model for Inflation Targeting under imperfect policy credibility. It modifies the conventional model in three ways: an endogenous policy credibility process, by which monetary policy can gain or lose credibility over time; non-linearities in the inflation equation and in the...

This paper highlights that central banks from Brazil, Chile, Colombia, Mexico, and Peru (the LA5 countries) reaped the benefits of what they sowed in successfully weathering the global crisis. The adoption of far-reaching institutional, policy, and operational reforms during the last two decades...

Inflation targeting is becoming the monetary policy framework of choice in a growing number of emerging market and developing countries. This paper examines the experience of non-industrial inflation targeting countries to review the implications for the Fund's approach to surveillance,...

The paper considers the merits of rules and discretion for monetary policy when the structure of the macroeconomic model and the probability distributions of disturbances are not well defined. It is argued that when it is costly to delay policy reactions to seldom-experienced shocks until formal...

Inflation distorts prices, erodes savings, discourages investment,stimulates capital flight, inhibits growth, and makes economic planning anightmare. During the past decade, several advanced economies have takena new approach to the age-old problem of controlling inflation throughmonetary policy...

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...