Comments inflation targeting framework for jamaica an empirical exploration l.jpg
This presentation is the property of its rightful owner.
Sponsored Links
1 / 14

Comments: “Inflation Targeting Framework for Jamaica: An Empirical Exploration” PowerPoint PPT Presentation


  • 337 Views
  • Updated On :
  • Presentation posted in: Travel / Places

Comments: “Inflation Targeting Framework for Jamaica: An Empirical Exploration”. Myriam Quispe-Agnoli Federal Reserve Bank of Atlanta Conference on Inflation Targeting October 4 –5, 2004. Objective of the paper.

Related searches for Comments: “Inflation Targeting Framework for Jamaica: An Empirical Exploration”

Download Presentation

Comments: “Inflation Targeting Framework for Jamaica: An Empirical Exploration”

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Comments inflation targeting framework for jamaica an empirical exploration l.jpg

Comments: “Inflation Targeting Framework for Jamaica: An Empirical Exploration”

Myriam Quispe-Agnoli

Federal Reserve Bank of Atlanta

Conference on Inflation Targeting

October 4 –5, 2004


Objective of the paper l.jpg

Objective of the paper

  • Is inflation targeting (IT) an effective framework for monetary policy in Jamaica?


Paper structure l.jpg

Paper Structure

  • Monetary Policy in Jamaica since 1990.

  • Literature review comparing the IT experience of developed and developing countries.

  • Review of the fundamental requirements for IT in Jamaica.

  • Discusses the implementation of IT in Jamaica.


Comments outline l.jpg

Comments’ Outline

  • I will follow the outline of the paper for my comments:

    • First, I will look at the preconditions for inflation targeting (IT) followed by questions on specific topics

    • Second, I will discuss the some issues on IT design and implementation

    • Finally, I will bring general questions


Suggested list of preconditions before adopting it l.jpg

Suggested list of preconditions before adopting IT

  • Central bank independence (CBI).

  • Macroeconomic stability.

  • Financial system stability.

  • Other institutional elements.


Preconditions for it in jamaica l.jpg

Preconditions for IT in Jamaica

  • Does the Central Bank have a reasonable degree of operational independence to ensure flexibility in monetary policy towards achieving the inflation target?

    Central Bank is independent but…

  • There is no law that prohibits public financing

  • Political independence is limited by the presence of government representatives on the board


Some questions regarding central bank independence l.jpg

Some Questions Regarding Central Bank Independence

  • Table to compare CBI estimates of IT developing countries and Jamaica.

  • What do you think about CBI during the monetary targeting period, 1996-2002?

  • What can the financing of the fiscal deficit tell us about CBI?


Preconditions for it in jamaica8 l.jpg

Preconditions for IT in Jamaica

  • Is monetary policy influenced by public sector borrowing from the bank?

    • Between 1994 and 1998, heavy reliance on seigniorage for public financing.

    • In subsequent years, external borrowing was the main source for public financing.

    • However, fiscal imbalances remain at high levels.


Some questions regarding fiscal dominance l.jpg

Some Questions Regarding Fiscal Dominance

  • Fiscal imbalances might limit or restrict the credibility of future IT in Jamaica

  • Is there a plan to implement tax reform or an effort to reorganize government expenditures in Jamaica?

  • Do you think that the domestic capital market might become an alternative source for public financing?


Preconditions for it in jamaica10 l.jpg

Preconditions for IT in Jamaica

  • A flexible and independent monetary policy requires a “deep” financial system that is an alternative source for public financing.

    • According to the paper, there is a well functioning financial market in Jamaica.

      • Competitive interest rates, no financial repression.

      • Diversified instruments for savings and investment.


Some questions regarding financial depth l.jpg

Some Questions Regarding Financial Depth

  • Could you tell us about the performance of private credit by banks as percentage of GDP?

  • Is there a regulatory and supervisory institution for the banking system?

  • What is the size and performance of the stock and bond market?

  • Is the financial system deep enough to absorb the placement of public debt?


Issues of it design and implementation l.jpg

Issues of IT design and implementation

  • Bosede analyzes the appropriate inflation index to use for IT, concluding that either core or headline inflation could be used as the relevant price index.

  • The author also uses a VAR model to show the effect of different inflation target horizon and the bandwidth on the stability of monetary policy.

  • Conclusion: a 24-month horizon is the adequate for a successful IT implementation.


General questions l.jpg

General Questions

  • Given external shocks, is the Central Bank's commitment to price stability as a primary goal credible?

  • What is the import component of the price index?

  • What is the level of the dollarization degree of the financial system?

  • Is there an effort to coordinate fiscal and debt management policies?

  • What is the likelihood of new legislation to protect Central Bank independence?


Some macroeconomic indicators l.jpg

Some Macroeconomic Indicators


  • Login