%0 Journal Article
%T Inflation targeting in high inflation emerging economies: lessons about rules and instruments
%A John B. Taylor
%J Journal of Applied Economics
%D 2019
%R https://doi.org/10.1080/15140326.2019.1565396
%X ABSTRACT This talk emphasizes the connection between inflation targeting and monetary policy rules. Inflation targeting is not enough. You need to have a policy procedure ¨C a policy rule ¨C to achieve the target. And one cannot design or evaluate a monetary policy rule without a target inflation rate. Hence, there is a symbiotic relationship between inflation targeting and monetary policy rules. Initially, the instrument in the policy rule was a monetary aggregate ¨C a quantity, usually the money supply. It was only later that research on monetary policy rules focused on another instrument of monetary policy ¨C the interest rate, as velocity became more volatile so the interest rate was more reliable as instrument, at least for low levels of inflation. Interest rate rules work best within a band between very high inflation and deflation. Outside that band, the central bank should rely more on money growth rules
%U https://www.tandfonline.com/doi/full/10.1080/15140326.2019.1565396