Inflation targeting in Chile

Schmidt-Hebbel, Klaus; Tapia, Matias

doi:10.1016/s1062-9408(02)00076-1

Cited by 58 publications

(17 citation statements)

References 11 publications

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“…Starting in the 1940s inflation increased significantly and became a major political and economic problem; until the 1990s repeated efforts to quell it proved to be unsuccessful (Meller 1996). In his celebrated work on inflationary inertia, Pazos (1972) bank was granted independence and it formally adopted an inflation targeting approach (Corbo 1998, Schmidt-Hebbel andTapia (2002), and Morandé (2002)). Since then inflation has declined significantly.…”

Section: Ii4 Further Results and Comments On Chile's Experiencementioning

confidence: 99%

The Relationship Between Exchange Rates and Inflation Targeting Revisited

Edwards¹

2006

170

148

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This paper deals with the relationship between inflation targeting and exchange rates. I address three specific issues: first, I analyze the effectiveness of nominal exchange rates as shock absorbers in countries with inflation targeting. This issue is closely related to the magnitude of the "pass-through" coefficient. Second, I investigate whether exchange rate volatility is different in countries with an inflation targeting regime than in countries with alternative monetary policy arrangements. And third, I discuss whether the exchange rate should play a role in determining the monetary policy stance under inflation targeting. An alternative way of posing this question is whether the exchange rate should have an independent role in an open economy Taylor rule.

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Section: Ii4 Further Results and Comments On Chile's Experiencementioning

confidence: 99%

The Relationship Between Exchange Rates and Inflation Targeting Revisited

Edwards¹

2006

170

148

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“…Gali and Monacelli (2005) emphasize that inflation targeting would entail substantially higher exchange rate volatility. However, Chile's experience with inflation targeting, as mentioned in Schmidt-Hebbel and Tapia (2002), 2 Some studies attempt to explain this phenomenon by considering the prevalence of producer currency pricing over local currency pricing of imports and whether exchange rates are endogenous to a country's inflation performance. See Campa & Goldberg (2002) and Devereux & Engel (2003).…”

Section: Introductionmentioning

confidence: 99%

Exchange rates, price levels, and inflation targeting: Evidence from Asian countries

Prasertnukul¹,

Kim

Kakinaka

2010

Japan and the World Economy

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This study examines how the adoption of inflation-targeting influenced exchange rate pass-through and volatility in four Asian countries (Indonesia, Korea, the Philippines, and Thailand) over the sample period of January 1990 to June 2007. We find that reforming policy by adopting inflation targeting generally helped reduce pass-through in Korea and Thailand, while the results are less clear in Indonesia and the Philippines. Still, the findings indicate that inflation targeting has caused a decline in exchange rate volatility in all four countries. The important lesson from the experiences of these Asian countries is that the adoption of inflation targeting contributes to achieving the ultimate goal of inflation stability through reducing exchange rate pass-through or variability.

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“…Thus, Chile was the second country in the world to adopt IT. The IT was used as a device to bring inflation gradually down to a stationary 3% level (Schmidt-Hebbel and Tapia, 2002). Specifically, the operating objective of monetary policy is to keep inflation projections at around 3% annually over a horizon of about 2 years where the width of the target range is set at plus or minus one percentage point.…”

Section: The Central Bank Of Chile's Spfmentioning

confidence: 99%

Multimodality and mixture distributions: an application to a Survey of Economic Expectations

Jaramillo

Piantini

2013

Applied Economics

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In this article we present the Silverman multimodality test and mixture distributions methodology, applying both approaches to the Survey of Economic Expectations of the Central Bank of Chile. The main results reflect the importance of a permanent monitoring of the complete distributions and not just central tendency meausures as is the practice in many central banks currently. We find that the forecasts of the private professional forecasters have systematically been in line with the inflation targeting range, although during episodes where the effective inflation proved to be outside the target range.

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Inflation targeting in Chile

Cited by 58 publications

References 11 publications

The Relationship Between Exchange Rates and Inflation Targeting Revisited

The Relationship Between Exchange Rates and Inflation Targeting Revisited

Exchange rates, price levels, and inflation targeting: Evidence from Asian countries

Multimodality and mixture distributions: an application to a Survey of Economic Expectations

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