Monday, 6 December 1999

From "Too much, too soon: IMF conditionality and inflation targeting"

By Gerald Epstein.

[...] despite little evidence of the success of inflation targeting in promoting economic growth, employment creation or poverty reduction, the IMF is increasingly using loan conditions and technical assistance to push its use [...] despite what the orthodox approach maintains, employment generation and economic growth, are not automatic by-products of stabilisation-focused central bank policy [...]

Surprisingly, despite a disappointing record, this almost single-minded focus on inflation is gaining a more secure foothold in monetary policy circles and the circles are widening to include an increasing number of developing countries. According to a recent report by the IMF, an increasing number of central banks in emerging markets are planning to adopt inflation targeting as their operating framework. An IMF staff survey of 88 non-industrial countries found that more than half expressed a desire to move to explicit or implicit quantitative inflation targets. Nearly three-quarters of these countries expressed an interest in moving to "fully-fledged" inflation targeting by 2010 [...] the IMF is considering altering its conditionality and monitoring structures to include inflation targets [...]

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