Modalities of Moving to Inflation Targeting in Armenia and Georgia

June 1, 2007

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Modalities of Moving to Inflation Targeting in Armenia and Georgia, (USA: International Monetary Fund, 2007) accessed November 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 reviews the current monetary and exchange rate policy frameworks in Armenia and Georgia, and the challenges associated with the choice of a credible nominal anchor in the context of large nominal and real shocks. The paper makes a case for a gradual transition to full-fledged inflation targeting (FFIT) in both countries in the medium term. The implications of this option are examined from various angles. In particular, the monetary transmission mechanisms and compliance with major institutional prerequisites for successful FFIT adoption are analyzed. Based on this analysis, the paper identifies a series of short- and medium-term recommendations, drawing on the experience of emerging market countries that successfully moved to FFIT.

Subject: Banking, Consumer price indexes, Exchange rate pass-through, Exchange rates, Inflation

Keywords: Armenia, Central bank, Country, Exchange rate, Georgia, WP

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2007/133
Stock No:

WPIEA2007133
ISBN:

9781451866971
ISSN:

1018-5941

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