Effects of Adopting Inflation Targeting Regimes in Emerging Country

Since the 1990s inflation targeting (IT) has been adopted by several central banks as a strategy for monetary policy. It is expected that the adoption of this monetary regime can reduce inflation and inflation volatility. His practice was marked by a large observed at the beginning of the 90s and 2000 stability a debate emerges on efficiency and economic performance of the scheme. Many studies have focused on this question has no authority to reach a final consensus. In the context of a simple empirical model, estimated with panel data for 17 emerging markets using both IT and non-IT observations, we find a significant and stable response running from inflation to policy interest rates in emerging markets that are following publically announced IT policies. By contrast, central banks respond much less to inflation in non-IT regimes. IT emerging markets follow a “mixed IT strategy ” whereby both inflation and real exchange rates are important determinants of policy interest rates