In the last years four Latin American countries (Chile, Colombia, Mexico and Peru) have switched to inflation targeting as the main mechanism to guide their monetary policies. In this paper we address some of the basic questions regarding its implementation: (i) which inflation measure should...

A central element of an inflation targeting approach to monetary policy is a proper measure of inflation. The international evidence suggests the use of core inflation measures. In this paper we claim that core inflation should be measured as the underlying trend of inflation that comes from...