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Inflation targeting (IT) is a relatively new monetary policy framework for low-income countries (LICs). The limited number of LICs with an IT framework and the short time that has elapsed since the adoption of this framework explains why there are no previous empirical studies on the performance of IT in LICs. This paper has made a first attempt at filling this gap. It finds that inflation targeting appears to be associated with lower inflation and inflation volatility. At the same time, there is no robust evidence of an adverse impact on output. This may explain the appeal of IT for many LICs, where building credibility of monetary policy is difficult and minimizing output costs of reducing inflation is imperative for social and political reasons.

Inflation targeting --- Targeting, Inflation --- Monetary policy --- Econometric models. --- Finance: General --- Inflation --- Money and Monetary Policy --- Price Level --- Deflation --- Monetary Policy --- Central Banks and Their Policies --- General Financial Markets: General (includes Measurement and Data) --- Monetary economics --- Macroeconomics --- Finance --- Emerging and frontier financial markets --- Monetary transmission mechanism --- Monetary policy frameworks --- Prices --- Financial markets --- Financial services industry --- Ghana

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Since the Asian crisis, ASEAN5 countries have expended considerable effort in trying to develop their domestic bond markets. Yet today these markets are not much larger, relative to GDP, than they were a decade before. How can we explain this? And does this mean that domestic markets have not, in fact, developed? The paper argues that bond market growth has been held back by a sharp fall in investment rates, which has left firms with little need for bond borrowing. Even so, markets have developed in other ways, to such an extent that substantial amounts of foreign portfolio investment have begun to flow into ASEAN5 bonds. These developments have important ramifications. With the investor base growing and infrastructure investment likely to rise, ASEAN5 bond markets could expand rapidly over the next decade, holding out the prospect that the region could finally achieve "twin engine" financial systems.

Bond market --- Bond markets --- Market, Bond --- Capital market --- Finance: General --- Investments: Bonds --- General Equilibrium and Disequilibrium: Financial Markets --- Financial Markets and the Macroeconomy --- Central Banks and Their Policies --- Financial Aspects of Economic Integration --- General Financial Markets: General (includes Measurement and Data) --- Finance --- Investment & securities --- Securities markets --- Emerging and frontier financial markets --- Bonds --- Corporate bonds --- Sovereign bonds --- Financial markets --- Financial institutions --- Financial services industry --- Malaysia

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Several Central American (CADR) countries with independent monetary policies are strengthening their monetary frameworks and some have implemented or are moving towards inflation targeting (IT) regimes. Strengthening the monetary policy frameworks of CADR is key to improving the effectiveness of monetary policy. The paper reviews the literature on the reforms needed for strengthening the monetary policy frameworks, and examines the experiences of IT countries, Chile, Peru, and Uruguay to help distill lessons for CADR. It also constructs an index to measure the relative strength of the monetary policy framework of CADR countries.

Banks and Banking --- Foreign Exchange --- Inflation --- Money and Monetary Policy --- Macroeconomics --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Monetary Policy --- Central Banks and Their Policies --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Price Level --- Deflation --- Monetary economics --- Banking --- Currency --- Foreign exchange --- Monetary policy frameworks --- Exchange rate flexibility --- Central bank autonomy --- Monetary policy --- Prices --- Central banks --- Price stabilization --- Banks and banking --- Costa Rica

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Improvements in financial regulation and supervision in the Central American region (CAPDR) have strengthened financial stability. Prudential instruments with potential macroeconomic effects have been introduced. Nonetheless, compared with the larger Latin American and selected industrial countries, there is still important scope for CAPDR to enhance financial supervision and regulation. Based on two surveys, and the analysis of the Basel Core Principles, the paper determines that some weaknesses exist in risk-based supervision, and that macroprudential measures have scarcely been deployed.

Banks and banking --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- Finance --- Financial institutions --- Money --- State supervision --- Central America --- Economic policy. --- Banks and Banking --- Finance: General --- Macroeconomics --- Business and Financial --- Financial Markets and the Macroeconomy --- Central Banks and Their Policies --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Institutions and Services: Government Policy and Regulation --- General Financial Markets: Government Policy and Regulation --- Financial services law & regulation --- Basel Core Principles --- Risk-based supervision --- Financial regulation and supervision --- Macroprudential policy instruments --- Consolidated banking supervision --- Financial sector policy and analysis --- Financial services industry --- Law and legislation --- Economic policy --- Costa Rica

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Despite growing interest among policymakers, there is no theory of independent fiscal institutions. The emerging literature on "fiscal councils" typically makes informal parallels with the theory of central bank independence, but a very simple formal example shows that such a shortcut is flawed. The paper then illustrates key features of a model of independent fiscal agencies, and in particular the need (1) to incorporate the intrinsically political nature of fiscal policy - which precludes credible delegation of instruments to unelected decisionmakers - and (2) to focus on characterizing "commitment technologies" likely to credibly increase fiscal discipline.

Fiscal policy --- Banks and banking, Central --- Budget deficits --- Deficits, Budget --- Budget --- Deficit financing --- Banker's banks --- Banks, Central --- Central banking --- Central banks --- Banks and banking --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Political aspects --- Econometric models. --- Government policy --- Banks and Banking --- Budgeting --- Inflation --- Public Finance --- Policy Objectives --- Policy Designs and Consistency --- Policy Coordination --- Fiscal Policy --- Structure, Scope, and Performance of Government --- National Deficit Surplus --- Debt --- Debt Management --- Sovereign Debt --- National Budget --- Budget Systems --- Central Banks and Their Policies --- Price Level --- Deflation --- Macroeconomics --- Public finance & taxation --- Budgeting & financial management --- Banking --- Public debt --- Budget planning and preparation --- Central bank autonomy --- Public financial management (PFM) --- Prices --- Debts, Public --- United Kingdom