‘Inflation targeting (IT) has become the sacred cow of central banking. But its
suitability to developing nations remains contested. The contributors to this volume
perform the valuable service of sketching out plausible, more development-friendly
alternatives. They are to be commended in particular for avoiding a one-size-fits-all
approach and paying close attention to the needs of specific countries. Their proposals
range from relatively minor tinkering in IT to comprehensive overhaul. A common theme is
the central role of the real exchange rate, which the central banks ignore at their
economies’ peril.’
– Dani Rodrik, Harvard University, US
‘As the world economy is devastated by a virulent financial crisis and jobs are lost in
scores, central bankers are increasingly questioned as to why they have failed to sustain
stability and growth even though they told us all along that conquering inflation would be
necessary and sufficient to do so – while hoping to get a pat on the back for achieving
a degree of price stability unprecedented in recent times. This book provides a lot of
food for thought on why. It is a powerful critique of the orthodox obsession with
inflation in neglect of the two deepseated problems of the unbridled market economy –
financial instability and unemployment. It is a must for all policy makers, notably in the
developing world, and for the mainstream.’
– Yilmaz Akyuz, formerly of the United Nations Conference on Trade and Development,
Geneva, Switzerland
‘This collective volume makes a compelling case for balancing the developmental and
stabilization functions of central banks. In particular, the authors emphasize that, as
practiced in many successful developing countries, competitive real exchange rates can be
good for growth and employment generation, and should thus be a specific focus of central
bank actions. The book is a must read for those looking for a more balanced framework for
central bank policies.’
– José Antonio Ocampo, Columbia University, US and former Under-Secretary-General of
the United Nations for Economic and Social Affairs
and Finance Minister of Colombia
This volume, written by an international team of economists, develops
concrete, country specific alternatives to inflation targeting, the dominant policy
framework of central bank policy that focuses on keeping inflation in the low single
digits to the virtual exclusion of other key goals such as employment creation, poverty
reduction and sustainable development.
The book includes thematic chapters, including analyses of class attitudes toward
inflation and unemployment and the gender impacts of restrictive monetary policy. Other
chapters propose improved monetary frameworks for Argentina, Brazil, India, Mexico, the
Philippines, South Africa, Turkey, and Vietnam. Policy frameworks that are explored
include employment targeting, and targeting a stable and competitive real exchange rate.
The authors also show that to reach a larger number of targets, including higher
employment and stable inflation, central banks must use a larger number of instruments,
including capital management techniques.
This volume offers concrete, socially valuable alternatives that economists, policy
makers, students and interested laypeople should consider before adopting one size fits
all, often inadequate, policies that have become a virtual policy making fad.
Edited by Gerald A. Epstein, Professor of Economics and Co-Director,
Political Economy Research Institute (PERI), University of Massachusetts-Amherst, US and A.
Erinc Yeldan, Professor of Economics, Bilkent University, Ankara, Turkey and
Member, Executive Committee of the International Development Economics Associates (IDEAs),
New Delhi, India
Contents:
Preface
PART I: INTRODUCTION AND THEORETICAL FRAMEWORKS
1. Beyond Inflation Targeting: Assessing the Impacts and Policy Alternatives
Gerald Epstein and A. Erinç Yeldan
2. Real Exchange Rate, Monetary Policy and Employment: Economic Development in a
Garden of Forking Paths
Roberto Frenkel and Lance Taylor
3. Inflation Targeting and the Real Exchange Rate in a Small Economy: A
Structuralist Approach
Jose Antonio Cordero
PART II: THEMATIC ISSUES: CLASS RELATIONS AND GENDER IMPACTS OF INFLATION
TARGETING
4. Income, Class and Preferences Towards Anti-Inflation and Anti-Unemployment
Policies
Arjun Jayadev
5. The Gendered Political Economy of Inflation Targeting: Assessing its Impacts on
Employment
Elissa Braunstein and James Heintz
6. Inflation and Economic Growth: A Cross-Country Non-Linear Analysis
Robert Pollin and Andong Zhu
PART III: INFLATION TARGETING: CRITIQUES AND COUNTRY-SPECIFIC ALTERNATIVES
7. Inflation Targeting in Brazil: 1999–2006
Nelson H. Barbosa-Filho
8. Alternatives to Inflation Targeting in Mexico
Luis Miguel Galindo and Jaime Ros
9. Five Years of Competitive and Stable Real Exchange Rate in Argentina, 2002–07
Roberto Frenkel and Martin Rapetti
10. A General Equilibrium Assessment of Twin-Targeting in Turkey
Cagatay Telli, Ebru Voyvoda and A. Erinç Yeldan
11. Employment Targeting Central Bank Policy: A Policy Proposal for South Africa
Gerald Epstein
12. Inflation Targeting and the Design of Monetary Policy in India
Raghbendra Jha
13. Towards an Alternative Monetary Policy in the Philippines
Joseph Anthony Lim
14. Monetary Policy in Vietnam: Alternatives to Inflation Targeting
Le Anh Tu Packard
336 pages, Hardcover
