Effectiveness and Commitment to Inflation Targeting Policy: Evidences from Indonesia and Thailand

Siregar, Reza.Y. and Goo, Siwei (2009): Effectiveness and Commitment to Inflation Targeting Policy: Evidences from Indonesia and Thailand.

Abstract

The chief objective of our paper is to highlight basic features of the IT policies adopted by Indonesia and Thailand, and to evaluate the commitment of the monetary authorities and the overall performances of the IT regime. The results demonstrate that the IT regime in these two economies has had some success, but not during the immediate aftermath of the Lehman Brothers’ collapse in the last quarter of 2008. Furthermore, the implementations of the IT policy in these two Southeast Asian economies have largely been “flexible” during the stable period, seeking the balance between narrowing output gap, managing exchange rate volatility, and anchoring inflationary pressure. However during the turbulent period, there had been a heightened focus in anchoring inflationary expectation.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inflationary Expectation; Output Gap; Inflation Targeting; Pass-through, Monetary Policy Rule.
• Subjects: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; F - International Economics > F3 - International Finance > F31 - Foreign Exchange; F - International Economics > F3 - International Finance > F33 - International Monetary Arrangements and Institutions

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