Is Inflation Targeting Feasible in Poland?
University of Toronto - Rotman School of Management; Copenhagen Business School; University of Aarhus - CREATES
Deutsche Bank, New York
International Monetary Fund (IMF) - European Department
Economics of Transition, Vol. 9, No. 1, March 2001
In this paper we analyze whether inflation targeting is feasible in Poland. There are at least three prerequisites for successful inflation targeting: 1) central bank independence, 2) a high degree of central bank accountability, transparency, and communication to the public, and 3) a predictable and stable relationship between inflation and the instruments of monetary policy. While the first two prerequisites are relatively easy to analyze, the third criterion requires formal statistical analysis, which we undertake in this paper. The first two prerequisites for targeting are found to be met in Poland, and the empirical analysis shows some evidence of significant relationships between inflation and monetary instruments in Poland. Hence inflation targeting appears feasible in Poland.
JEL Classification: C32, C53, E31, E52Accepted Paper Series
Date posted: September 27, 2001
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