Inflation Targeting in Georgia: Are We There Yet?

August 1, 2007

Preview Citation

Format: Chicago

Giorgi Bakradze, and Andreas Billmeier. Inflation Targeting in Georgia: Are We There Yet?, (USA: International Monetary Fund, 2007) accessed December 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper evaluates whether Georgia is ready to adopt inflation targeting (IT), a monetary policy framework that several emerging markets have adopted recently. After reviewing selected prerequisites for successfully implementing IT, the paper focuses on whether one specific precondition is in place-an empirically stable monetary transmission mechanism. Building on a baseline VAR model, it presents several extensions to explore the various channels using causality tests, impulse responses, and variance decompositions. The paper finds that once the central bank overcomes some institutional and operational weaknesses and establishes a more reliable transmission mechanism, it could adopt IT over the medium term.

Subject: Currencies, Exchange rates, Inflation, International reserves, Monetary aggregates

Keywords: Exchange rate, Inflation targeting, Interest rate, Monetary policy, WP

Publication Details

Pages:

33
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2007/193
Stock No:

WPIEA2007193
ISBN:

9781451867572
ISSN:

1018-5941

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