Volumen 11: Monetary Policy Under Inflation Targeting


Inflation targeting cum exchange-rate floating has become the framework of choice in countries pursuing an independent and effective monetary policy. Since its adoption by New Zealand (1990) and Chile (1991), central banks of nearly 25 industrial and emerging economies have implemented an explicit inflation target as their nominal anchor. Many more emerging economies are planning to adopt inflation targeting in coming years. The theory and practice of monetary policy under inflation targeting have evolved hand-in­-hand, benefiting mutually. This volume presents 14 papers that add substantially to the body of theoretical findings, empirical research, and policy lessons on the conduct of monetary policy under inflation targeting. New theoretical work focuses on the optimality of inflation targeting under different fiscal policies and varying degrees of price stickiness, and considering the zero-bound problem. Other analytical research addresses improvements in central bank communication required to raise monetary policy efficiency and analyzes the optimal degree of monetary policy transparency and communication. New findings are provided on the choice between inflation and price-level targeting. This book also presents a large body of new empirical evidence on the role of the exchange rate, pre-conditions at the start of the regime, gains in macro performance and monetary policy efficiency, and anchoring of inflation expectations in inflation-targeting countries, in comparison to non-targeting countries. The transition from partial to full-fledged inflation targeting in Chile receives particular attention, reporting changes in monetary policy rules and in inflation determinants and dynamics.

Editado por: Frederic S. Mishkin, Klaus Schmidt-Hebbel.




"What is it about these hardy little Southern Hemisphere central banks? Congratulations to the Central Bank of Chile for once again pushing forward the frontiers of practical policy knowledge-this time on one of the more successful tools to enter the policymakers' toolkits in recent decades: inflation targeting. This is state of the science."

Alan Bollard, Governor, Reserve Bank of New Zealand

"Sometimes a policy works, and it is worth documenting how and why. That is the case with inflation targeting in emerging markets, and Mishkin and Schmidt-Hebbel have brought together in this volume research from the best academics explaining the how and the why. Sometimes a conference volume is well worth reading, because it gives you most of what you need to know on a critical issue from definitive contributors, and that is the case with this one."

Adam S. Posen, Senior Fellow, Pecerson Inscicuce for Incernacional Economics

"In this excellent collection, top monetary experts from around the world apply a rare combination of economic theory, data analysis, and experience to advance substantially our understanding of one of the most important developments in monetary policy in history: the great inflation-targeting movement. Beginning in Chile and New Zealand, inflation targeting has now spread arollnd the world and, as this book documents, has dramatically reduced inflation and ushered in a period of unprecedented economic stability, especially in emerging markets. I welcome the emphasis on the policy problems facing small open economies, including the complex interaction of exchange rate fluctuations and inflation-targeting goals".

John Taylor, Mary and Robert Raymond Professor of Economics, Stanford University