Inflation Targeting In Dollarized Economies
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Inflation Targeting In Dollarized Economies
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Author : Leonardo Leiderman
language : en
Publisher:
Release Date : 2006
Inflation Targeting In Dollarized Economies written by Leonardo Leiderman and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Anti-inflationary policies categories.
The shift to inflation targeting has contributed to the relatively low inflation observed in some emerging market economies although, as noted by many economists, the preconditions required for a successful implementation were not in place. The existence of managed exchange rate regimes, a narrow base of domestic nominal financial assets, the lack of market instruments to hedge exchange rate risks, together with fear of floating and dollarization, have been stressed as factors that might weaken the efficacy of monetary policy. By examining various aspects of monetary transmission and policy formulation in two highly dollarized economies (Peru and Bolivia) vis-à-vis two economies with low levels of dollarization (Chile and Colombia), we found that, while dollarization imposes differences in both the transmission capacity of monetary policy and its impact on real and financial sectors, it does not preclude the use of inflation targeting as a policy regime.
The Monetary Transmission In Dollarized And Non Dollarized Economies
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Author : Mr.Santiago Acosta Ormaechea
language : en
Publisher: International Monetary Fund
Release Date : 2011-04-01
The Monetary Transmission In Dollarized And Non Dollarized Economies written by Mr.Santiago Acosta Ormaechea and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011-04-01 with Business & Economics categories.
The paper conducts a comparative study of the monetary policy transmission in two economies that run a well-established IT regime, Chile and New Zealand, vis-à-vis two economies operating under relatively newer IT regimes, and which are exposed to a significant degree of dollarization, Peru and Uruguay. It is shown that the traditional interest rate channel is effective in Chile and New Zealand. For Peru and Uruguay, the exchange rate channel is instead more relevant in the transmission of monetary policy. This latter result follows from the limited impact of the policy rate in curbing inflationary pressures in these two countries, in combination with the fact that they have a relatively large and persistent exchange rate pass through. Finally, it is shown that the on-going de-dollarization process of Peru and Uruguay has somewhat strengthened their monetary transmission through the interest rate channel.
Monetary Policy Rules For Financially Vulnerable Economies
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Author : Mr.Eduardo Morón
language : en
Publisher: International Monetary Fund
Release Date : 2003-02-01
Monetary Policy Rules For Financially Vulnerable Economies written by Mr.Eduardo Morón and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003-02-01 with Business & Economics categories.
One distinguishable characteristic of emerging market economies is that they are not financially robust. These economies are incapable of smoothing out large external shocks, as sudden capital outflows imply large and abrupt swings in the real exchange rate. Using a small open-economy model, this paper examines alternative monetary policy rules for economies with different degrees of liability dollarization. The paper answers the question of how efficient it is to use inflation targeting under high liability dollarization. Our findings suggest that it might be optimal to follow a nonlinear policy rule that defends the real exchange rate in a financially vulnerable economy.
Inflation Targeting And Exchange Rate Management In Less Developed Countries
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Author : Mr.Marco Airaudo
language : en
Publisher: International Monetary Fund
Release Date : 2016-03-08
Inflation Targeting And Exchange Rate Management In Less Developed Countries written by Mr.Marco Airaudo and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-03-08 with Business & Economics categories.
We analyze coordination of monetary and exchange rate policy in a two-sector model of a small open economy featuring imperfect substitution between domestic and foreign financial assets. Our central finding is that management of the exchange rate greatly enhances the efficacy of inflation targeting. In a flexible exchange rate system, inflation targeting incurs a high risk of indeterminacy where macroeconomic fluctuations can be driven by self-fulfilling expectations. Moreover, small inflation shocks may escalate into much larger increases in inflation ex post. Both problems disappear when the central bank leans heavily against the wind in a managed float.
Monetary Policy In Dollarized Economies
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Author : Mr.Adam Bennett
language : en
Publisher: International Monetary Fund
Release Date : 1999-03-15
Monetary Policy In Dollarized Economies written by Mr.Adam Bennett and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1999-03-15 with Business & Economics categories.
Dollarization - the holding by residents of a substantial portion of their assets in foreign-currency-denominated assets- is a common feature of developing and transition economies, and therefore typical of many countries with IMF - supported adjustment programs. This paper analyzes policy issues that arise-and various monetary strategies that may be pursued- when the monetary sector is dollarized, and it considers the implications that dollarization has for the design of IMF programs.
Financial De Dollarization
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Author : Mr.Luis Catão
language : en
Publisher: International Monetary Fund
Release Date : 2016-08-16
Financial De Dollarization written by Mr.Luis Catão and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-08-16 with Business & Economics categories.
We re-appraise the cross-country evidence on the dollarization of financial systems in emerging market economies. Amidst striking heterogeneity of patterns across regions, we identify a broad global trend towards financial sector de-dollarization from the early 2000s to the eve of the global financial crisis of 2008–09. Since then, de-dollarization has broadly stalled or even reversed in many economies. Yet a few of them have continued to de-dollarize. This suggests that domestic factors are also important and interact with global factors. To gain insight into such an interaction, we examine the experience of Peru since the early 1990s and find that low global interest rates, low global risk-aversion, and high commodity prices have fostered de-dollarization. Domestic macro-prudential measures that raise the relative cost of domestic dollar loans and the introduction and adherence to inflation targeting have also been key.
Inflation Targeting In Practice
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Author : Mr.Mario I. Bléjer
language : en
Publisher: International Monetary Fund
Release Date : 2000-08-21
Inflation Targeting In Practice written by Mr.Mario I. Bléjer and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2000-08-21 with Business & Economics categories.
A growing number of countries are anchoring their monetary policy through explicit inflation targeting. This policy has already scored remarkable successes in several countries, establishing central bank credibility, and reining in inflation where it had long been stubbornly high. But implementing inflation targets raises many difficult questions. What prerequisites must an economy and its institutions meet for the strategy to work? What choices should central banks make from the menu of possible variations on the basic approach? This book summarizes the discussions in a seminar at which economists and policymakers from ten countries reviewed their experiences with inflation targeting.
Foreign Exchange Intervention In Inflation Targeters In Latin America
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Author : Mr.Marcos d Chamon
language : en
Publisher: International Monetary Fund
Release Date : 2019-03-01
Foreign Exchange Intervention In Inflation Targeters In Latin America written by Mr.Marcos d Chamon and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-03-01 with Business & Economics categories.
Foreign exchange intervention is widely used as a policy tool, particularly in emerging markets, but many facets of this tool remain limited, especially in the context of flexible exchange rate regimes. The Latin American experience can be informative because some of its largest countries adopted floating exchange rate regimes and inflation targeting while continuing to intervene in foreign exchange markets. This edited volume reviews detailed accounts from several Latin American countries’ central banks, and it provides insight into how and with what aim many interventions were decided and implemented. This book documents the effectiveness of intervention and pays special attention to the role of foreign exchange intervention policy within inflation-targeting monetary frameworks. The main lesson from Latin America’s foreign exchange interventions, in the context of inflation targeting, is that the region has had a considerable degree of success. Transparency and a clear communication policy have been key. For economies that are not highly dollarized, rules-based intervention helped contain financial instability and build international reserves while preserving inflation targets. The Latin American experience can help other countries in the design and implementation of their policies.
Important Elements For Inflation Targeting For Emerging Economies
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Author : Ms.Inci Ötker
language : en
Publisher: International Monetary Fund
Release Date : 2010-05-01
Important Elements For Inflation Targeting For Emerging Economies written by Ms.Inci Ötker and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-05-01 with Business & Economics categories.
This is the fifth chapter of a forthcoming monograph entitled "On Implementing Full-Fledged Inflation-Targeting Regimes: Saying What You Do and Doing What You Say." It examines whether certain conditions have to be met before emerging economies can adopt an inflation-targeting regime and provides some empirical evidence on the matter. The issues analyzed are the priority of inflation targeting over other goals, the absence of fiscal dominance, central bank independence, the degree of control over the policy interest rate, a sound methodology for forecasting, and the soundness of financial institutions and markets, and resilience to changes in exchange rates and interest rates.
Foreign Exchange Intervention As A Monetary Policy Instrument
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Author : Felix Hüfner
language : en
Publisher: Springer Science & Business Media
Release Date : 2012-12-06
Foreign Exchange Intervention As A Monetary Policy Instrument written by Felix Hüfner and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-12-06 with Business & Economics categories.
Foreign exchange intervention is frequently being used by central banks in countries which have a floating exchange rate. Most theoretical monetary policy models, however, do not take this phenomenon into account. This book contributes to close this gap between theory and practice by interpreting foreign exchange intervention as an additional monetary policy instrument for inflation targeting central banks. In-depth empirical analyses of the foreign exchange operations and interest rate policy of five inflation targeting countries (Australia, Canada, New Zealand, Sweden and the United Kingdom) demonstrate how foreign exchange intervention is used in practice.