"Forecast targeting," forward-looking monetary policy that uses central-bank judgment to construct optimal policy projections of the target variables and the instrument rate, may perform substantially better than monetary policy that disregards judgment and follows a given instrument rule. This...

This paper assumes that a central bank commits itself to maintaining an inflation target and then asks what measure of the inflation rate the central bank should use if it wants to maximize economic stability. The paper first formalizes this problem and examines its microeconomic foundations. It...

The debate about Canadian-U.S. monetary integration is surveyed. The choice is among overall monetary orders, rather than exchange rate regimes, and questions of policy credibility and political accountability are crucial. Canada's recent economic performance under inflation targets, and...

In a standard New Keynesian model, a myopic central bank concerned with stabilizing inflation and changes in the output gap will implement a policy under discretion that replicates the optimal, timeless perspective, precommitment policy. By stabilizing output gap changes, the central bank...

This paper proposes new measures of the effectiveness of inflation targeting (IT) and evaluates its main drivers in a (large) sample of advanced economies (AEs) and emerging market and developing economies (EMDEs). Using synthetic control methods, we find that IT has heterogeneous effects on...

Under inflation targeting inflation exhibits negative serial correlation in the United Kingdom, and little or no persistence in Canada, Sweden and New Zealand, and estimates of the indexation parameter in hybrid New Keynesian Phillips curves are either equal to zero, or very low, in all...

Besides providing enhanced macroeconomic and financial stability, a commitment to optimum monetary policy conduct in a developing economy like Nigeria could better deliver greater long-run stability of both internal and external macroeconomic factors. The need for an ordered monetary policy...

The objective of this paper isto investigate the impact of inflation targeting strategy on monetary policy transmission mechanism by estimating the impact of deposit rate on consumption to GDP ratio in emerging market economies. The study considers sixteen years of annual data from 2001 to 2016...

We use a novel anchoring-measure based on the distribution across professional forecasters' point forecasts to test empirically whether target formulations matter for the anchoring of long-term inflation expectations. In a panel of 29 countries, we find that the formulation of a point target...

This paper investigates the forward-lookingness of monetary policy related to stabilising inflation over time under different degrees of central bank credibility in the four largest Latin American economies, which experienced a different transition path to the full-fledged inflation targeting...