Inflation Targeting and Policy Rules

Inflation Targeting and Policy Rules is an essential book for understanding how Mexico’s monetary policy has been evolving and functioning, from the beginning of the century to recent, highlighting the doctrine of policy rules and focusing on inflation targeting, both fundamental elements necessary to comprehend the operation of the main central banks of the world.

The book is valuable because of its theoretical and empirical treatment applied to the policy rules and to inflation targeting, which range from their origin, criticism, development, controversies, evolution, and evaluation of the subject. It is accessible reading for anyone interested in approaching the subject of the monetary policy of a developing country. It is, without a doubt, a relevant addition to the bank of knowledge on the monetary reality of any country that has recently adopted inflation targeting and use a policy rule based on interest rate as instrument, as well as the flexible currency exchange regimen. It will become an essential source for future investigations in Mexico and other countries in similar situations.

The book:

• Explains the analytical framework that consists of developing conditional probability as essential for rational expectations hypothesis

• Presents a synthetic but detailed exposure of the approach of inflation targeting, especially based on the consensus among monetary authorities in the pursuit of low and stable inflation, detailing some of the most relevant experiences as well as their main objections.

• Reviews the process origin-evolution of monetary policy rules,

• Assesses the actions of the Banco de Mexico in terms of the implementation of the approach of inflation targeting

• Summarizes the highlights of Mexico’s monetary policy and offers conclusions

The book is suitable for macroeconomics courses and courses dealing with developing economies as well as for financial professionals seeking recent and trends.