Toward Inflation Targeting in Sri Lanka

WPIEA2011081 Image
Price:  $18.00

Author/Editor: Ding , Rahul Anand, Shanaka J. Peiris
Release Date: © April, 2011
ISBN : 978-1-45522-607-8
Stock #: WPIEA2011081
Stock Status: On back-order

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This paper develops a practical model-based forecasting and policy analysis system (FPAS) to support a transition to an inflation forecast targeting regime in Sri Lanka. The FPAS model provides a relatively good forecast for inflation and a framework to evaluate policy trade-offs. The model simulations suggest that an open-economy inflation targeting rule can reduce macroeconomic volatility and anchor inflationary expectations given the size and type of shocks faced by the economy. Sri Lanka could aim to target a broad inflation range initially due to its susceptibility supply-side shocks while enhancing exchange rate flexibility and strengthening the effectiveness of monetary policy in the transition to an inflation forecast targeting regime.


Banks and banking , Central banks , Economic policy , Financial institutions and markets , Monetary policy

More publications in this series: Working Papers

More publications by: Ding ; Rahul Anand ; Shanaka J. Peiris