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.
- Language
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Englisch
- Bibliographic citation
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Series: IWH Discussion Papers ; No. 9/2020
- Classification
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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
- Subject
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forward-lookingness
central bank credibility
inflation targeting
hybrid monetary policy rule
time-varying coefficients
- Event
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Geistige Schöpfung
- (who)
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Gießler, Stefan
- Event
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Veröffentlichung
- (who)
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Halle Institute for Economic Research (IWH)
- (where)
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Halle (Saale)
- (when)
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2020
- Handle
- URN
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urn:nbn:de:gbv:3:2-121596
- Last update
-
10.03.2025, 11:41 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Gießler, Stefan
- Halle Institute for Economic Research (IWH)
Time of origin
- 2020
Other Objects (12)
The Evolution of Monetary Policy in Latin American Economies: Responsiveness to Inflation under Different Degrees of Credibility
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The Evolution of Monetary Policy in Latin American Economies: Responsiveness to Inflation under Different Degrees of Credibility
Asymmetric Inflation Target Credibility
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Inflation target credibility in times of high inflation
Inflation Target Credibility in Times of High Inflation
Credibility of central banks inflation forecasts
Inflation in developing economies
Inflation targeting and liquidity traps under endogenous credibility
Inflation targeting, credibility and non-linear Taylor rules
Credibility Of Monetary Regimes: Is Inflation Targeting Different?
Credibility of government policy: Lessons for economies in transition
Time-varying credibility, anchoring and the Fed's inflation target
The Evolution of Monetary Policy in Latin American Economies: Responsiveness to Inflation under Different Degrees of Credibility
Asymmetric Inflation Target Credibility
Asymmetric Inflation Target Credibility
Inflation target credibility in times of high inflation
Inflation Target Credibility in Times of High Inflation
Credibility of central banks inflation forecasts
Inflation in developing economies
Inflation targeting and liquidity traps under endogenous credibility
Inflation targeting, credibility and non-linear Taylor rules
Credibility Of Monetary Regimes: Is Inflation Targeting Different?
Credibility of government policy: Lessons for economies in transition