Author(s)

Donghua Liu

Corresponding Author

Donghua Liu

ABSTRACT

The stability of inflation expectation is of great importance to the sound development of a country’s economy, which has a positive effect on both “anti-inflation” and “anti-deflation”. While the policy essence of Inflation targeting is to guide the stability of inflation expectations. However, few systematic analyses have been conducted to study the institutional causes of Inflation targeting. Taking emerging economies as the research object, this paper carry out the multi-dimensional analysis with the methods of comparative analysis. This paper argues that after the adoption of Inflation targeting in emerging economies, the emphasis on the target of “stabilizing prices” has been greatly enhanced, the independence and policy transparency of the Central Bank have been greatly improved, and the accountability mechanism of the Central Bank has been promoted. These factors will promote the credibility and effectiveness of policies, and then have a positive impact on enhancing the stability of inflation expectations.

KEYWORDS

Inflation targeting, Stabilizing inflation expectations, Institutional causes, Emerging economy