A assimetria nas preferências dos Bancos Centrais é um assunto que vem sendo muito discutido no meio acadêmico, mas até o momento essa polêmica tem se restringido a economias desenvolvidas como a canadense e inglesa. O que o texto a seguir se propõe é, em parte, tentar trazer essa discussão para o campo dos países emergentes, tomando como centro da análise a economia brasileira. Preferências assimétricas consistem num comportamento por parte da autoridade monetária que atribui perdas diferentes a desvios da taxa de inflação observada em relação à meta definida, que embora sejam de mesma magnitude apresentam sinais opostos. Replicando os testes já usados em outros estudos, o regime de Metas de Inflação é aqui abordado, iniciando sua análise sob uma ótica mais geral e depois o particularizando para a economia brasileira, desde sua concepção (em 1999 após a crise cambial de janeiro desse ano) até os dias atuais. Este comportamento assimétrico parece, ainda, ocasionar um viés inflacionário diferente daquele proposto pelo modelo KPBG (Kydland-Prescott-Barro-Gordon) que surge da ambição do Banco Central em estabelecer uma taxa de desemprego que esteja abaixo da taxa natural, num ambiente no qual as preferências, ao contrário do proposto, são quadráticas. Infelizmente, os dados brasileiros ainda não apontam na direção da assimetria, talvez por causa do tempo de implantação do regime no Brasil, talvez devido às turbulências que a economia brasileira sofreu decorrentes de crises internacionais e de suas conseqüências sobre o desempenho da política de Metas de Inflação que gerou inúmeros insucessos. No entanto, o histórico de hiperinflações e sua influência sobre as expectativas e os comportamentos dos agentes econômicos nos faz suspeitar de que dentro em breve a assimetria será não só detectada em nossa economia como também será fruto de estudos para o desenho e direcionamento da política monetária. / Central Banks preferences asymmetry is a subject that has been discussed for quite some time in academic publications. However, such controversy has been restricted to developed economies, such as the English and Canadian ones, so far. The following text intends to bring about the discussion to emerging countries, using the brazilian economy as the focus of the analysis. Asymmetric preferences can be defined as a particular behaviour of the monetary authorities that weigh differently their losses concerning inflation deviations from its predetermined target that have the same magnitude but different signs. The main tests used in other studies have been repeated here and the inflation target regime is approached, initially from a broader outlook and then specifically to the brazilian case, ever since its conception in 1999 (after the exchange rate crash in the same year) to the present day. The asymmetric behaviour seems to cause an inflationary bias different from the one proposed by the KPBG model (Kydland-Prescott-Barro-Gordon) which derives from the Central Bank ambition to establish an unemployment rate lower than its natural rate, in an environment in which preferences are quadratic. Unfortunately, brazilian data do not suggest asymmetry yet, maybe because the inflation target regime has been installed for too little time, or because of all the turmoil in the brazilian economy in recent international crisis and their consequences on the regime performance, that has been usually compromised. Nevertheless, the history of hyperinflations and their impacts on expectations and the agents behaviour raises suspicions that soon not only will asymmetry be found in our economy but it will also be studied to design monetary policy directives.

The aim of the thesis is to address issues concerning modelling and evaluation of monetary policy by obtaining targeting rules from optimisation techniques using welfare loss functions that capture asymmetries and zone targeting behaviours. The motivation is that the specification of the most widely used monetary policy rule, i.e. the Taylor rule, may not adequately capture the stylised key features of monetary policy practice as has been shown by Nobay and Peel (2003), Aksoy et al. (2006) and Boinet and Martin (2008). The thesis also addresses the importance of the behaviour of certain financial asset prices and their implications in monetary policy decision making. It also analyses the impact of uncertainty about the true state of the economy on domestic interest rates. First, the response of monetary policy to deviations of inflation and output from their target values based on a framework that allows asymmetric and zone targeting monetary authorities’ preferences is estimated.1 Second, the monetary policy reaction function, which is augmented with a comprehensive index that collects and synthesises information from the financial asset markets is estimated for South Africa based on a framework that allows asymmetric and zone targeting monetary authorities’ preferences.2 Third, the impact of uncertainty about the state of the economy on monetary policy in South Africa using a framework that allows asymmetric and zone targeting monetary authorities’ preferences is analysed. The main findings are that the monetary authorities’ response towards inflation is zone symmetric and their response to output fluctuations is asymmetric. The second major finding is that the conditions in the financial asset markets form an important information set for the monetary authorities and that the monetary authorities pay close attention to the conditions in these markets by placing an equal weight on financial asset markets booms and recessions. The empirical results also reveal a significant impact of uncertainty about the state of the economy on domestic interest rates during the inflation targeting period and that the monetary authorities exhibit discretionary behaviour when implementing monetary policy under uncertainty. The thesis contributes to the body of knowledge in the field of economics by addressing important issues in monetary policy design and conduct using a framework that capture the stylised key features of monetary policy practice. All these issues are important in design and conduct of monetary policy. They are currently debated at many central banks including South Africa. / Thesis (PhD)--University of Pretoria, 2011. / Economics / unrestricted

This doctoral thesis contains three essays on the macroeconomic impact of inflation targeting: (1) Inflation-targeting regime, as a framework for monetary policy conduct, has been adopted by central banks in thirty countries. Some of these countries enjoy high incomes while others have middle incomes. In contrast to the development-based classification –often applied in the literature, thus ignoring income disparity– this study employs income-based classification in constructing the data sample. The objective is to investigate, using a panel of middle-income countries, whether inflation targeting is a good remedy for high inflation. In addition to the commonly used covariates in the literature, this study also includes in its covariate matrix the worldwide governance indicators as proxy for institutional quality. The findings exhibit a significant reduction of inflation and its volatility among the inflation-targeting adopters compared to the non-adopting middle-income countries. The results are robust to the exclusion of high inflation episodes, and to using the alternative measures of inflation. The results are also robust to the post-estimation sensitivity tests recommended for such empirical analysis. (2) Many economists acknowledge the paramount role that foreign investment plays in fostering economic development and growth via integrating economies around the globe. Studies have shown that foreign investment, particularly foreign direct investment (FDI) is attracted to countries that exhibit good governance, low uncertainty and a high degree of macroeconomic stability. The literature also argues that monetary policy under inflation targeting (IT) mitigates uncertainty, enhances governance and brings macroeconomic stability to the adopting countries. Hence, it would seem that the IT-adoption should enable the adopting countries attract the largest FDI inflows. To verify this conjecture, this study performs a comparison between the IT-adopting countries and the non-adopters in attracting FDI. Using a panel of OECD and middle-income countries, the empirical findings exhibit an interesting but contradicting pattern: when it comes to the OECD countries, the results show that the IT-adopters do better than the non-adopters in attracting the FDI inflows. For the middle-income countries, however, the IT-adoption appears to have the opposite effect: a significant reduction in the FDI inflows is witnessed among the IT-adopters compared to their counterparts. The results are robust to the post-estimation sensitivity tests. (3) Inflation targeting, as a monetary-policy framework, is said to promote economic efficiency and growth. Yet, when evaluating the macroeconomic performance of inflation-targeting regimes, the existing literature only emphasizes the dynamics of inflation and the costs associated with taming inflation. There is hardly any assessment of the claim of efficiency and growth. To fill this gap, and to measure the causal impact of inflation-targeting adoption on economic efficiency, we compare the dynamics of output growth and long-term unemployment between countries that have adopted inflation targeting and the non-adopting countries. Our findings seem to refute the efficiency claim, and paint a bleak picture of inflation targeting: when compared to the countries that did not adopt inflation targeting, there is a significant reduction in the average growth rate among the inflation-targeting adopters by over ½ percentage point. Additionally, long-term unemployment significantly rises among the inflation-targeting countries by almost 2 percentage points as compared to the non-adopters. These results are robust to both the exclusion of the outlier observations and to the sensitivity tests recommended for such analysis.

The Czech National Bank adopted an inflation targeting approach after the change rate turmoil in 1997. It went about a new strategy that was known only in a few developed countries. Monetary policy is being realized by directly targeting on its final object (price stability). I analyze the developments of consumer price index, inflation expectations, prognosis of inflation and other economic values, because I determine, if the inflation targeting is a correct alternative for monetary policy in case of Czech Republic, Slovakia and United Kingdom. I can tell that changeover on inflation targeting has being guaranteed a stable economic setting with a low measure of inflation, but results confirm that. This is important for our entrance into monetary union.

The thesis consists of two essays on inflation targeting. The hrst essay examines how do centrál banks set their inflation targets. Survey of centrál banks' communication regard-ing the target is presented, theoretical model is developed and finally empirical analysis is conducted on a panel of inflation targeting countries. This pioneering analysis of the topič leads us to conclusion that inflation targets are influenced by more variables than centrál banks admit. In addition to past and foreign inflation, inflation variability and GDP growth we find significant impact of centrál bank credibility and other institutional factors. The short second essay surveys literatúre assessing performance of inflation targeting and outlines perspectives of inflation targeting as a monetary policy framework. The conclusion is that if inflation targeting centrál banks stick to their best practice in transparency and communication and remain open to innovations, inflation targeting will háve a good chance to score well even in the periods of turmoil.

Is inflation targeting an appropriate framework for monetary policy? Experience from the inflation-targeting countries countries are optimistic about inflation targeting as a monetary-policy framework. South Africa is also following this trend. The international literature review of the topic offers lessons to be learnt from the common experience of the countries considered. It shows that inflation targeting is not a universal remedy to modern economic ills -- there is an emerging danger of assigning monetary policy a larger role than that which it can perform; a danger of expecting monetary policy to accomplish tasks that it cannot achieve; and a danger of preventing monetary policy from making the contribution that it is capable of doing. Therefore, inflation targeting cannot address all the macroeconomic problems that face many countries, except for inflation. Nonetheless, it plays a crucial role in improving macroeconomic performance. / Economics / M.A. (Economics)

Is inflation targeting an appropriate framework for monetary policy? Experience from the inflation-targeting countries countries are optimistic about inflation targeting as a monetary-policy framework. South Africa is also following this trend. The international literature review of the topic offers lessons to be learnt from the common experience of the countries considered. It shows that inflation targeting is not a universal remedy to modern economic ills -- there is an emerging danger of assigning monetary policy a larger role than that which it can perform; a danger of expecting monetary policy to accomplish tasks that it cannot achieve; and a danger of preventing monetary policy from making the contribution that it is capable of doing. Therefore, inflation targeting cannot address all the macroeconomic problems that face many countries, except for inflation. Nonetheless, it plays a crucial role in improving macroeconomic performance. / Economics / M.A. (Economics)

The Gambia, a small open economy, implements a managed floating exchange rate regime. The central bank (CBG) has the mandate to design and implement monetary policy with the primary aim of achieving price and exchange stability in the economy. In spite of interventions by the CBG, the country continues to experience fluctuations in its exchange rate with several instances of major spikes in recent years. This thesis proposes a solution, through a change of policy regime, to control the long time and disturbing depreciation of the domestic currency. In a vector auto regressive framework, the study investigates sources of the exchange rate variability using quarterly data from 1998:Q1 to 2012:Q4. Furthermore, the OCA theory and the pre- conditions of inflation targeting are used to make a choice between a common currency and inflation targeting for the Gambia. The findings from the Johansen test of cointegration suggest that the selected key macroeconomic variables are cointegrated, meaning, they have long run equilibrium. The results of the VECM reveal that error correction mechanism can be achieved in some of the variables. This indicates that there exists the convergence process. In addition, the results from the impulse response analysis put forward that the macroeconomic variables have effect on...

This thesis compares monetary policies, institutional status and different approaches to the selection of monetary policy and setting goals of central banks in the case of Czech National Bank, the European Central Bank and the Federal Reserve System. The first chapter deals with the characteristics of the central bank, legislative regulation of the Czech National Bank is analysed there and it mentions the Czech peculiarities in the adjustment of the central bank. In addition, this chapter deals with the possibilities for the name of the central bank and there are examples of different solutions from the world. The second chapter focuses on the analysis of the central bank's position in the state. It emphasise independence as it is the core value for the central bank. This chapter also describes the regulatory and supervisory powers of the central bank and briefly discuss the composition of assets and financing of the central bank and its basic financial statements. The third chapter deals with the theory of monetary policy. Particular attention is paid to the monetary policy of inflation targeting. Furthermore, this chapter provides an overview of transmission mechanisms and describes various monetary policy instruments which central banks have. At the end of this part of the thesis there is a...

Le ciblage de l’inflation est le cadre le plus récent de la politique monétaire dans le monde. Il est désormais largement choisi par les pays avancés ainsi que par les pays émergents. Cependant, deux questions principales sont encore en débat particulièrement dans les pays émergent et en développement. Ils s’agissent des avantages du ciblage d’inflation et du respect de conditions préalables afin d’assurer le succès de ce régime. Empiriquement, on conclut que le ciblage d’inflation est un cadre de politique monétaire réussie pour les pays émergents. En plus, il n'est pas nécessaire pour ces pays de satisfaire toutes les conditions préalables strictes avant de réussir à l'adopter. La situation budgétaire et l'indépendance de la banque centrale jouent un rôle plus important que les autres conditions et doivent être préparées en premier lieu. Concernant le Vietnam, par l'approche structurelle vecteur autorégressif (VAR), la thèse montre que la politique monétaire de la banque centrale n’est pas efficace. Donc, il permet de confirmer la nécessité du changement de stratégie monétaire par rapport au cadre actuel. Cependant, notamment parce que la banque centrale n’est pas indépendante, le Vietnam ne peut pas adopter le ciblage d’inflation dans un bref délai. Les recommandations du durcissement de la contrainte budgétaire et de l’augmentation l’indépendance de la banque centrale sont suggérées avant la mise en œuvre de sa stratégie de ciblage d’inflation. / Inflation targeting (hereafter IT) is the newest monetary policy framework in the world. The practice of IT has been chosen by both advanced countries and emerging countries. However, two main issues are still under debate particularly in emerging and developing countries. They are the benefits of IT and preconditions to success adoption. Empirically, we showed that IT is considered as a successful monetary policy framework for emerging countries. In addition, it is not necessary for emerging markets to satisfy all stringent preconditions to successfully adopt IT. In practice, the fiscal situation and the central bank independence play a more important role than other conditions and need to be prepared first.Basing on Structural Vector Autoregression (SVAR), the thesis concludes that Vietnamese monetary policy currently does not effectively control the inflation rate. Inflation targeting framework would be a solution to this. Nonetheless, this thesis concludes that at this moment in time Vietnam is not able to adopt the IT framework, as it still must prepare some of the preconditions required before official adoption. The recommendations of hardening the budget constraint and increase central bank independence in relationship with government are suggested before implementing IT strategy.