TY  - JOUR
AU  - Aizenman,Joshua
AU  - Hutchison,Michael
AU  - Noy,Ilan
TI  - Inflation Targeting and Real Exchange Rates in Emerging Markets
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14561
PY  - 2008
Y2  - December 2008
UR  - http://www.nber.org/papers/w14561
L1  - http://www.nber.org/papers/w14561.pdf
N1  - Author contact info:
Joshua Aizenman
Department of Economics;  E2
1156 High St.
University of California, Santa Cruz
Santa Cruz, CA  95064
Tel: 831/459-4791
Fax: 831/459-5077
E-Mail: jaizen@ucsc.edu

Michael M. Hutchison
Department of Economics
E2
University of California
Santa Cruz, CA  95064
Tel: 831-459-2600; hutch@.ucsc.edu
E-Mail: hutch@ucsc.edu

Ilan Noy
Saunders Hall 542
2424 Maile Way
University of Hawaii, Manoa
Honolulu, HI 96822
Tel: 808 9567749
E-Mail: noy@hawaii.edu
AB  - We investigate inflation targeting (IT) in emerging markets, focusing on the role of the real exchange rate and the distinction between commodity and non-commodity exporters. IT emerging markets appear to follow a “mixed strategy” whereby both inflation and real exchange rates are important determinants of policy interest rates. The response to real exchange rates, however, is more constrained than in non-IT regimes. We also find that the response to real exchange rates is strongest in those countries following IT policies that are relatively intensive in exporting basic commodities; and present a theoretical model that explains these empirical results. 
ER  -