The Taylor Rule and Inflation Targeting in Moldova

Vîntu, Denis (2025): The Taylor Rule and Inflation Targeting in Moldova.

Abstract

This paper analyzes the implementation, effectiveness, and challenges of the inflation targeting framework in the Republic of Moldova. It explores the theoretical foundations of inflation targeting, reviews Moldova’s historical transition from high and volatile inflation to a structured monetary policy framework, and examines the National Bank of Moldova's strategies for achieving price stability. Empirical analysis of policy performance, including Taylor Rule estimates and responses to economic shocks, is presented. The study highlights the strengths of inflation targeting, such as enhanced credibility and anchored inflation expectations, while also addressing challenges related to external shocks, structural constraints, and data limitations. Finally, the paper provides perspectives for improving Moldova’s monetary policy framework, emphasizing forecasting, communication, and institutional capacity, thereby contributing to sustainable economic stability and growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inflation Targeting, Taylor Rule, Monetary Policy, Republic of Moldova, Central Bank, Price Stability, Emerging Economies, Interest Rate Policy, Macroeconomic Stability, Policy Effectiveness
• Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O23 - Fiscal and Monetary Policy in Development

References

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