Modalities of Moving to Inflation Targeting in Armenia and Georgia

38 Pages Posted: 18 Jun 2007

See all articles by Era Dabla-Norris

Era Dabla-Norris

International Monetary Fund (IMF)

Daehaeng Kim

International Monetary Fund (IMF)

Mayra Rebecca Zermeno Livas

International Monetary Fund (IMF)

Andreas Billmeier

International Monetary Fund (IMF) - Middle East and Central Asia Department

V. Kramarenko

International Monetary Fund (IMF)

Date Written: June 2007

Abstract

This paper reviews the current monetary and exchange rate policy frameworks in Armenia and Georgia, and the challenges associated with the choice of a credible nominal anchor in the context of large nominal and real shocks. The paper makes a case for a gradual transition to full-fledged inflation targeting (FFIT) in both countries in the medium term. The implications of this option are examined from various angles. In particular, the monetary transmission mechanisms and compliance with major institutional prerequisites for successful FFIT adoption are analyzed. Based on this analysis, the paper identifies a series of short- and medium-term recommendations, drawing on the experience of emerging market countries that successfully moved to FFIT.

Suggested Citation

Dabla-Norris, Era and Kim, Daehaeng and Zermeno Livas, Mayra Rebecca and Billmeier, Andreas and Kramarenko, V., Modalities of Moving to Inflation Targeting in Armenia and Georgia (June 2007). IMF Working Papers, Vol. , pp. 1-36, 2007. Available at SSRN: https://ssrn.com/abstract=994463

Era Dabla-Norris

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Daehaeng Kim

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Mayra Rebecca Zermeno Livas

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Andreas Billmeier (Contact Author)

International Monetary Fund (IMF) - Middle East and Central Asia Department ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

V. Kramarenko

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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