Arbeitspapier
The evolution of monetary policy in Latin American economies: Responsiveness to inflation under different degrees of credibility
This paper investigates the forward-lookingness of monetary policy related to stabilising inflation over time under different degrees of central bank credibility in the four largest Latin American economies, which experienced a different transition path to the full-fledged inflation targeting regime. The analysis is based on an interest rate-based hybrid monetary policy rule with time-varying coefficients, which captures possible shifts from a backward-looking to a forward-looking monetary policy rule related to inflation stabilisation. The main results show that monetary policy is fully forward-looking and exclusively reacts to expected inflation under nearly perfect central bank credibility. Under a partially credible central bank, monetary policy is both backward-looking and forward-looking in terms of stabilising inflation. Moreover, monetary authorities put increasingly more priority on stabilising expected inflation relative to actual inflation if central bank credibility tends to improve over time.
- Sprache
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Englisch
- Erschienen in
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Series: IWH Discussion Papers ; No. 9/2020
- Klassifikation
-
Wirtschaft
Multiple or Simultaneous Equation Models: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
Central Banks and Their Policies
- Thema
-
forward-lookingness
central bank credibility
inflation targeting
hybrid monetary policy rule
time-varying coefficients
- Ereignis
-
Geistige Schöpfung
- (wer)
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Gießler, Stefan
- Ereignis
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Veröffentlichung
- (wer)
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Halle Institute for Economic Research (IWH)
- (wo)
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Halle (Saale)
- (wann)
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2020
- Handle
- URN
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urn:nbn:de:gbv:3:2-121596
- Letzte Aktualisierung
-
10.03.2025, 11:41 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Gießler, Stefan
- Halle Institute for Economic Research (IWH)
Entstanden
- 2020
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