The Dynamic Behaviour of Implicit Inflation Targets for 'Inflation Targeting Lite' Economies

Download or read book The Dynamic Behaviour of Implicit Inflation Targets for 'Inflation Targeting Lite' Economies written by Vipul Bhatt and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper we estimate the evolution of the implicit inflation target underlying the monetary policy of 18 'inflation targeting lite' economies (i.e., emerging countries that target inflation implicitly) using a time-varying parameter specification of the Taylor rule. We find significant heterogeneity in the evolution of the estimated implicit inflation target across countries in our sample. We find that institutional factors characterising an economy, such as central bank independence, extent of financial development and fiscal soundness, are strongly associated with the level of the implicit inflation target.