The czech embarrassment of inflation targeting in transition

2000 ◽  
Vol 9 (3) ◽  
Author(s):  
Martin Mandel ◽  
Vladimír Kosmata
Keyword(s):  
Monetary Policy ◽  
Inflation Targeting ◽  
Policy Framework ◽  
The Third ◽  
Interest Rate Volatility ◽  
Monetary Targeting ◽  
Theoretical Assumptions ◽  
National Bank ◽  
Monetary Policy Framework

In 1998 the Czech National Bank (CNB) changed its monetary policy framework and started to target inflation. The article discusses main theoretical aspects of inflation targeting and some practical problems with implementation of inflation targeting. The main characteristics of the inflation and monetary targeting are described in the first and second part. The third part deals with practical issues connected with inflation targeting (number of countries using inflation targeting, quality of inflation predictions, inflation and interest rate volatility). In the final part the CNB monetary policy function is estimated and the results are compared with the theoretical assumptions of the inflation targeting.

In search for a new anchor: inflation targeting in the czech republic

2000 ◽  
Vol 9 (3) ◽  
Author(s):  
Jiří Jonáš
Keyword(s):  
Monetary Policy ◽  
Czech Republic ◽  
Interest Rates ◽  
Inflation Targeting ◽  
Policy Framework ◽  
The Czech Republic ◽  
Fourth Part ◽  
National Bank ◽  
New Framework ◽  
Monetary Policy Framework

In December 1997 the Czech National Bank introduced a new framework for the conduct of monetary policy, inflation targeting. This article examines the preliminary experience with inflation targeting in the Czech Republic. In the second part, we discuss the reasons that have led the Czech National Bank to introduce this monetary policy framework. Third part describes principal operational features of inflation targeting in the Czech Republic, and discusses the specifics of inflation targeting under the conditions of an economy in transition. Fourth part reviews the conduct of monetary policy under the new regime, focusing particularly on how the new policy framework has affected central bank's decisions about interest rates. Fifth part discusses some reasons why implementation of inflation targeting during the first two years was difficult, and sixth part evaluates the experience with inflation targeting and provides some suggestions for improving the framework.

An Evaluation of Monetary Targeting Regimes

2000 ◽  
Vol 174 ◽  
pp. 105-113 ◽  
Author(s):  
Ray Barrell ◽  
Karen Dury
Keyword(s):  
Monetary Policy ◽  
Inflation Targeting ◽  
Price Level ◽  
Policy Framework ◽  
Policy Regime ◽  
Feedback Mechanisms ◽  
Policy Regimes ◽  
Monetary Targeting ◽  
Over Time ◽  
Monetary Policy Framework

The policy regime in Europe has put the economy on ‘auto-pilot’. We investigate different designs for the required feedback mechanisms. The uncertainty facing an economy depends on the pattern of shocks it faces, the response of the private sector to those shocks and also the policy reactions of the authorities. Two ‘ideal type’ policy regimes are investigated, and inflation targeting is compared to nominal aggregate targeting. In general it is suggested that targeting a nominal aggregate reduces the variability of the price level, and stabilises the price level more quickly over time. Inflation outcomes are also less variable for the Euro Area, and they are less asymmetric when a nominal aggregate is targeted. The new European fiscal framework requires that countries set deficit targets close to balance. We show that there is plenty of space for automatic stabilisers to work, but the room available depends in part on the monetary policy framework chosen.

scholarly journals Republic of Belarus

2020 ◽  
Vol 20 (162) ◽  
Author(s):  
Keyword(s):  
Monetary Policy ◽  
Inflation Targeting ◽  
Initial Conditions ◽  
Policy Framework ◽  
Projection Model ◽  
Road Map ◽  
National Bank ◽  
The Republic ◽  
Analysis System ◽  
Monetary Policy Framework

The National Bank of the Republic of Belarus (NBRB) is reforming its monetary policy framework in line with recommendations of past IMF TA missions and its Road Map for Transitioning to Inflation Targeting with the aim of eventually adopting inflation targeting (IT). Transitioning to IT would require, among other strengthening the monetary policy forecasting and analysis system (FPAS) and better integrating the core quarterly projection model (QPM) into the decision-making process. This mission was the seventh in a planned series of quarterly FPAS TA missions. It was mainly aimed at helping with reviewing the initial conditions and compiling a QPM-based forecast as a part of the NBRB’s September forecasting round. The mission, in addition, worked on strengthening processes within the FPAS.

scholarly journals Monetary Policy in the Post Keynesian Theoretical Framework

2017 ◽  
Vol 37 (1) ◽  
pp. 45-64
Author(s):  
FÁBIO HENRIQUE BITTES TERRA ◽  
PHILIP ARESTIS
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Inflation Targeting ◽  
Debt Management ◽  
Policy Framework ◽  
Original Writings ◽  
Policy Model ◽  
Original Contribution ◽  
The Interest Rate ◽  
Monetary Policy Framework

ABSTRACT The purpose of this contribution is to develop a Post Keynesian monetary policy model, presenting its goals, tools, and channels. The original contribution this paper develops, following (Keynes’s 1936, 1945) proposals, is the use of debt management as an instrument of monetary policy, along with the interest rate and regulation. Moreover, this paper draws its monetary policy model by broadly and strongly relying on Keynes’s original writings. A monetary policy model erected upon this basis relates itself directly to the Post Keynesian efforts to offer a monetary policy framework substantially different from the Inflation Targeting Regime of the New Macroeconomic Consensus.

Implementation Of Inflation Targeting And Budget Deficit Performance In Emerging Countries: A Treatment Effect Evaluation

2014 ◽  
Vol 30 (4) ◽  
pp. 1077 ◽  
Author(s):  
Mohamed Kadria ◽  
Mohamed Safouane Ben Aissa
Keyword(s):  
Monetary Policy ◽  
Treatment Effect ◽  
Budget Deficit ◽  
Inflation Targeting ◽  
Emerging Countries ◽  
Policy Framework ◽  
It Adoption ◽  
Effect Evaluation ◽  
Fiscal Discipline ◽  
Monetary Policy Framework

<p>In this paper, we tried to examine whether the implementation of inflation targeting (IT) monetary policy and its discipline character allows reducing the budget deficit in emerging countries. To do this, we used the propensity score matching methodology to evaluate the treatment effect of IT on fiscal discipline, in terms of budget deficit performance, in emerging countries has adopted this monetary policy framework. Our empirical analysis, conducted on a sample of 41 economies (20 IT and 21 non-IT economies) for the period from 1990 to 2010, shows that on average IT adoption has had a considerable and significant effect in reducing the budget deficit. Our results are confirmed by the robustness tests and corroborate the literature of disciplining effects of IT regime on the fiscal discipline.</p>

scholarly journals South African price changes and inflation since 1974: a note on the testing of inflation accuracy

2011 ◽  
Vol 11 (2) ◽  
pp. 229-246
Author(s):  
Jannie Rossouw ◽  
Vishnu Padayachee
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
South African ◽  
Inflation Targeting ◽  
Policy Framework ◽  
Inflation Target ◽  
Price Levels ◽  
Price Movements ◽  
Actual Price ◽  
Monetary Policy Framework

As inflation credibility in South Africa records low readings when measured in terms of inflation credibility barometers, this note aims at assessing whether actual price movements provide any grounds for low inflation credibility.  It compares the price movements of similar items with the rate of inflation over a period of 32 years, i.e. from 1974 to 2006, and discusses the use of an inflation accuracy indicator to compare estimated price levels adjusted by the rate of inflation and actual price levels.  Over the period of comparison no systematic over- or underreporting of changes in prices in terms of the rate of inflation could be detected and the analysis suggests that little or no basis can be found to justify low inflation credibility.  Inflation credibility is more likely than not influenced by the most recent purchasing experiences of consumers.  Doubts concerning the accuracy of inflation figures could nevertheless result in the general public concluding that monetary policy aiming at the achievement of an inflation target brings only the pain of high interest rates without the tangible benefits of lower inflation, thereby jeopardising the usefulness of an inflation-targeting monetary policy framework.

scholarly journals "Does Inflation Targeting Framework Make a Significant Difference in Lowering Price Level?” What is Its Implication to Indonesia’s Inflation Rate?

2015 ◽  
Vol 61 (2) ◽  
pp. 131
Author(s):  
Faisal Rachman
Keyword(s):  
Monetary Policy ◽  
Inflation Targeting ◽  
Inflation Rate ◽  
Price Level ◽  
Structural Break ◽  
Policy Framework ◽  
Difference In Difference ◽  
Public Expectation ◽  
Significant Difference ◽  
Monetary Policy Framework

AbstractIn the last two decades many countries have been starting to employ Inflation Targeting Framework (ITF) as their main monetary policy framework. This is done to achieve an objective of anchoring public expectation on inflation which in the end will steer the price level movement towards ITF’s ultimate target of relatively low and stable inflation rate. By conducting Difference-in-Difference method on panel data consisting of five countries implementing ITF since 2001 and twenty-one selected non-ITF countries for period 1990-2010, it is statistically proved that ITF adoption has a significant effect on inflation. In case of Indonesia, through Structural Break approach, the implementation of ITF since 2005 is also proved able to lower and stabilize inflation rate.Abstrak Dalam dua dekade terakhir ini banyak negara yang telah mulai menggunakan Inflation Targeting Framework (ITF) sebagai kerangka utama kebijakan moneter mereka. Hal ini dilakukan guna mencapai tujuan pengendalian ekspektasi publik yang pada akhirnya akan mengendalikan pergerakan tingkat harga relatif rendah and stabil. Dengan menggunakan metode Difference-in-Difference pada data panel, yang terdiri dari lima negara yang telah mengimplementasikan ITF sejak tahun 2001 dan dua puluh satu negara bukan pengguna ITF, untuk periode 1990-2010, disimpulkan bahwa ITF memiliki dampak signifikan pada tingkat inflasi. Untuk kasus Indonesia yang telah mengimplementasikan ITF sejak tahun 2005, melalui metode Structural Break disimpulkan hasil yang sama, yaitu tingkatan harga yang rendah dan stabil.

Inflation Targeting in Uganda

2018 ◽  
Author(s):  
Martin Brownbridge ◽  
Louis Kasekende
Keyword(s):  
Monetary Policy ◽  
Financial Markets ◽  
Interest Rates ◽  
Inflation Targeting ◽  
Policy Framework ◽  
Price Shocks ◽  
Short Term ◽  
Basic Principles ◽  
Operating Target ◽  
Monetary Policy Framework

The Bank of Uganda introduced an inflation targeting (IT) monetary policy framework in 2011, replacing a decades-old money targeting framework. This chapter reviews Uganda’s experience and concludes that an IT framework is feasible for Uganda, despite shallow financial markets, volatile exchange rates, supply price shocks which make inflation more volatile and difficult to forecast, and lack of data. Key prerequisites were the operational independence of the central bank and the primacy of the core inflation objective for monetary policy. The successful adoption of IT in Uganda depended on the adoption of a set of basic principles, including: the primacy of the inflation forecast in setting policy; the separation of monetary from fiscal operations; the adoption of a short-term interest rate as the sole operating target, rather than e.g. a mix of interest rates and monetary aggregates; and an emphasis on clear communications.

scholarly journals Is the wage rate the real anchor of the inflation targeting monetary policy framework?

2017 ◽  
Vol 76 (302) ◽  
pp. 9-54 ◽  
Author(s):  
Ignacio Perrotini Hernádez ◽  
Juan Alberto Vázquez Muñóz
Keyword(s):  
Monetary Policy ◽  
Wage Rate ◽  
Inflation Targeting ◽  
Policy Framework ◽  
The Real ◽  
Monetary Policy Framework
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