Inflation targeting regimes

This paper divides the monetary frameworks of countries that use an inflation target to define their monetary framework into three different regimes: (i) full-fledged inflation targeting, (ii) implicit price stability anchor, and (iii) inflation targeting lite. The regimes are differentiated by the clarity and credibility of the commitment to the inflation target. The revealed preference for different regimes is related empirically to cross-country structural differences in economic and financial development. Policy implications of moving, front one regime to another are drawn. especially for emerging market countries aiming at full-fledged inflation targeting. (c) 2005 Elsevier B.V. All rights reserved.