A Dynamic Approach to Inflation Targeting in Transition Economies
ZEI Working Paper No. B00-11
54 Pages Posted: 30 Oct 2000
Date Written: August 2000
Abstract
This study views inflation targeting as a viable monetary regime for more advanced transition economies. A dynamic approach to the trajectory of disinflation and to the flexibility of direct inflation targeting is presented in the context of achieving monetary convergence to the EU/AMU. The candidate countries are advised to begin from strict inflation targeting and to follow with a more flexible inflation targeting regime before they establish a necessary 'foundational credibility' and monetary stability. These steps, ultimately followed by a euro-peg, are necessary in preparing for accession to the eurozone. The early experiences of the Czech Republic and Poland with inflation targeting are examined.
JEL Classification: E32, E52, P33
Suggested Citation: Suggested Citation
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