The author addresses the challenges and risks associated with inflation targeting as a monetary policy framework. The study focuses on two major international economic policy issues: (1) the implications of differing national regimes of inflation targeting for international economic policy cooperation, and (2) the adoption of inflation targeting by emerging-market economies that often lack stable monetary policy environments and credible policy authorities--a situation that, among other things, can complicate the use of the inflation targeting framework as the basis for IMF-supported stabilization programs.
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