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...

The broader governance reform debate-which goes beyond quotas to issues such as engagement by high-level policymakers, Fund management selection, Board structure, rules and accountability-has not got very far in garnering a consensus at the Executive Board. This is the case even though, in...

This paper discusses the central banking, monetary, and banking laws for 17 countries in Europe, an area where many of the techniques that are now universally used in regulating or controlling the supply of money and credit were developed. The complete text of the basic central bank law of each...

The paper presents a model of fiscal dominance with borrowing constraints, and provides evidence for a large number of sub-Saharan African countries on the relative importance of fiscal and monetary determinants of inflation. Based on the dynamic response of inflation to different shocks,...

This Selected Issues paper examines the acceleration of inflation over the past year in Chile, identifying domestic shocks to food and energy prices as main drivers. The paper uses the Jeanne-Rancière model to calculate Chile’s optimal ratio of international reserves to GDP. It analyzes the...

The swift and decisive policy response of Korea has contributed to an impressive economic recovery from the financial turmoil. Executive Directors welcomed the well-calibrated and gradual exit strategy while aiming to achieve strong and sustainable long-term economic growth. Directors welcomed...

The recent global financial crisis has exposed the limitations of a conventional inflation targeting framework in insulating an economy from all shocks, and demonstrated that its rigid application may aggravate the effect of shocks on output and inflation. Possible refinements to the inflation...

Sound policies and favorable external conditions have led to a strong economic recovery, but important challenges lie ahead. Uruguay’s near-term economic prospects are generally favorable. The main short-term challenge is rising inflation in the wake of vigorous growth and capital...

This paper discusses key findings of the Financial Sector Assessment Program (FSAP) covering the transparency of monetary policy in the Republic of Indonesia. There is a reasonably high degree of transparency in Indonesia’s monetary policy, with much progress having been made over the...

This 2008 Article IV Consultation highlights that rapid domestic demand growth in Ukraine pushed the economy beyond its capacity in 2007–08, leading to accelerating inflation. The demand expansion, fed by fiscal and income policies and a capital-inflow driven surge in money and credit...