A Dynamic Approach to Inflation Targeting in Transition Economies
Lucjan T. Orlowski
Sacred Heart University - John F. Welch College of Business
ZEI Working Paper No. B00-11
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.
Number of Pages in PDF File: 54
JEL Classification: E32, E52, P33
Date posted: October 30, 2000
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