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Inflation Targeting: Analytical Framework and Lessons from Successful Brazilian Experiences
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Saeid Mirza Mohammadi *   |
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Abstract: (12903 Views) |
| Monetary policy-makers have always been keen to formulate an appropriate monetary policy to prevent inflationary consequences of excessive variations in the value of national currency against foreign exchanges. Hence, by adopting necessary monetary instruments, they have tried to set inflationary targeting objectives. This paper first attempts to demonstrate the system of inflation targeting within the framework of a simple model consisting of Phillips relations and IS curves. This would make it possible to examine the effect of interest rate on production gap as well as the positive relation between production and inflation. Secondly, the successful mechanism of inflation targeting system in Brazil and the monetary developments which followed the new monetary programs in that country is studied in this paper. Regarding the fact that the determination of specific inflation targeting contributes to the control of the adverse effects of inflationary expectations in addition to guarantee the success of monetary policies, the application of this method may be considered as a possible solution to control inflation by the monetary authorities in Iran. |
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| Keywords: Monetary Policies, Inflation Targeting |
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Full-Text [PDF 215 kb]
(3354 Downloads)
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Type of Study: Research |
Subject:
General
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