Does the adoption of inflation targets affect central bank behavior?

Article Abstract:

Countries using inflation targets were found to better at projecting an image of stability to international investors, which consequently protects their markets from perturbations in the international investments market. Inflation targets standards are better than exchange rates targets since inflation targets tend to protect the interest rates from fluctuations, which work better for investors. Inflation targets are also better standards for economic policy formulations especially if economic indicators are unable to predict a potential resurgent inflation.

Economic Planning & Research, Foreign investments, Economic conditions

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Comment

Article Abstract:

Inflation targeting has very little significance in an economy that is fast integrating itself to the global economy, since the relative stability of money supply will come secondary to the effects of a global economy. This is manifest in the conclusion of the study wherein no significant difference can be seen in the use of inflation targeting and exchange rate targeting in effecting a stable economy. What matters more is the issue of discretionary faculties in economic control, which has more potential in effecting inflation.

Currency Stabilization Programs, Money supply, Currency stabilization

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Comment

Article Abstract:

Research into the effects of inflation targeting as an instrument of economic development of countries can be better studied using the outcomes resulting from the use of inflation targeting, than studying the mechanisms of inflation targeting formulation. This is because inflation targets tend to rely on subtle information shown by economic indicators that do not require drastic actions. The manifestations of inflation targeting are more apparent when drastic corrective actions are taken.

Administration of Urban Planning and Community and Rural Development, Economic Development NEC, Evaluation

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