Monetary Models and Inflation Targeting in Emerging Market Economies.
This paper extends and modifies the Keynesian critique of inflation targeting with reference to stabilisation policy in emerging market economies. The IMF ‘basic monetary programming framework’ for developing countries uses government borrowing and the exchange rate as policy instruments in order to achieve specific inflation and balance of payments targets. This paper first adapts this standard model in order to include short-term capital flows and the floating exchange rate arising from fin...Expand abstract
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