1 INFLATION TARGETING: ASSESSING THE EVIDENCE

The aim of this chapter is to deal with the empirical aspects of the ‘new ’ monetary policy framework, known as Inflation Targeting. We review the evidence for both developed and emerging economies. The emphasis, though, is on emerging economies, which can be thought of as preparing the ground for the chapter to follow that concentrates on the experience with inflation targeting in Brazil. The results gathered in this study demonstrate that although Inflation Targeting has gone hand-in hand with low inflation, it is very far from declaring the strategy a resounding success. The evidence produced in this chapter suggests that non-Inflation-Targeting central banks have also been successful on this score. At a general level this chapter should be read as providing the necessary prolegomena for the chapter that follows, which concentrates crucially on the Brazilian experience