Inflation Targeting Regimes in Emerging Market Economies: To Invest or Not to Invest?

2021 ◽  
Author(s):  
Douglas Silveira ◽  
Ricardo Barbosa Lima Mendes Oscar
Keyword(s):  
Inflation Targeting ◽  
Emerging Market ◽  
Emerging Market Economies ◽  
Market Economies

Terms of Trade Shocks and Inflation Targeting in Emerging Market Economies

2015 ◽  
Vol 84 (1) ◽  
pp. 81-108 ◽  
Author(s):  
Seedwell Hove ◽  
Albert Touna Mama ◽  
Fulbert Tchana Tchana
Keyword(s):  
Inflation Targeting ◽  
Emerging Market ◽  
Terms Of Trade ◽  
Emerging Market Economies ◽  
Market Economies ◽  
Trade Shocks

scholarly journals Patterns of Foreign Exchange Intervention under Inflation Targeting

2020 ◽  
Vol 20 (69) ◽  
Author(s):  
Gustavo Adler ◽  
Kyun Suk Chang ◽  
Zijiao Wang
Keyword(s):  
Foreign Exchange ◽  
Inflation Targeting ◽  
Foreign Currency ◽  
Emerging Market ◽  
Policy Instrument ◽  
Emerging Market Economies ◽  
Foreign Exchange Intervention ◽  
Market Economies ◽  
Monetary Regimes ◽  
Emerging Market Countries

The paper documents the use of foreign exchange intervention (FXI) across countries and monetary regimes, with special attention to its use under inflation targeting (IT). We find significant differences between advanced and emerging market economies, with the former group conducting FXI limitedly and broadly symmetrically, while the use of this policy instrument in emerging market countries is pervasive and mostly asymmetric (biased towards purchasing foreign currency, even after taking into account precautionary motives). Within emerging markets, the use of FXI is common both under IT and non-IT regimes. We find no evidence of FXI being used in response to inflation developments, while there is strong evidence that FXI responds to exchange rates, indicating that IT central banks in EMDEs have dual inflation/exchange rate objectives. We also find a higher propensity to overshoot inflation targets in emerging market economies where FXI is more pervasive.

scholarly journals Optimal Inflation in Russia: Theory and Practice

2020 ◽  
Vol 15 (4) ◽  
pp. 8-29
Keyword(s):  
Inflation Targeting ◽  
Emerging Market ◽  
Threshold Level ◽  
Developed Countries ◽  
Theory And Practice ◽  
Emerging Market Economies ◽  
Inflation Target ◽  
Target Setting ◽  
Market Economies ◽  
Panel Threshold Regression

The article provides a comprehensive analysis of optimality of the Bank of Russia’s inflation target. It considers the theoretical framework of optimal inflation, international practice of inflation target setting, and econometric estimates. The paper summarizes the theoretical mechanisms of optimality of zero or positive inflation and concludes that there are a significant number of mechanisms leading to optimality of positive inflation in the literature. Further, the countries’ experience of inflation targeting is analyzed, and the value of the inflation target and the frequency of its revision in Russia, developed countries and emerging market economies are compared. The article also provides the authors’ estimates of optimal inflation based on the application of the panel threshold regression method for four groups of countries, including Russia, for the period 1990–2018: the largest emerging market economies; emerging market economies with export as a key source of income; post-Soviet countries; and countries of Central and Eastern Europe. The study provides some empirical evidence in favor of the optimal inflation rate varying from 3.5% to 4% for homogeneous samples of countries, including Russia. The results also show that low inflation (up to the threshold level equal to the inflation target in Russia) is associated with economic growth. The study concludes that the current inflation target in Russia is valid and provides some suggestions regarding further improvements of inflation targeting policy in Russia.

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