Studies of the interactions between inflation targeting strategies and their institutional context: Application to emerging economies.

Summary This thesis analyzes the interactions between inflation targeting strategies and their institutional context in emerging economies. More specifically, the empirical investigations carried out in this thesis aim to study the role of the institutional framework in the conduct and effectiveness of this monetary policy strategy. To this end, we proceed in two stages. First, we consider the institutional framework as exogenous to the adoption of inflation targeting and analyze the extent to which this framework may have played a role in the macroeconomic performance of inflation targeting countries. Thus, after laying the conceptual foundations of inflation targeting and highlighting the role of economic and institutional prerequisites in the choice of emerging economies to adopt this monetary policy strategy (chapter 1), we show that a certain number of institutional conditions have been able to reinforce the effectiveness of inflation targeting in terms of price stability (chapter 2). Then, in a second step, we take a post-adoption perspective and consider the institutional framework as endogenous to the adoption of inflation targeting. The objective is then to analyze the response of the authorities in emerging economies to the adoption of this monetary policy framework. We show that the adoption of inflation targeting has a disciplining effect on the conduct of fiscal policy, in particular by encouraging the government to intensify its efforts to mobilize public revenues (chapter 3). Finally, we analyze the exchange rate policy of inflation-targeting emerging countries and show that the simultaneous pursuit of an official inflation target and an implicit exchange rate target can be counterproductive in terms of macroeconomic performance, especially when this exchange rate management is motivated by financial stability considerations (chapter 4). Hence the importance for emerging countries wishing to adopt an inflation-targeting strategy to carry out upstream structural reforms aimed at developing their banking and financial markets.