01795cas a2200265 a 4500 AALejournalIMF004814 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451866483 1018-5941 BD-DhAAL BD-DhAAL Li, Shujing. Balance of Payments Crises Under Inflation Targeting / Shujing Li, Isabel Yan, Michael Kumhof. Washington, D.C. : International Monetary Fund, 2007. 1 online resource (26 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper analyzes a small open economy model under inflation targeting. It shows why such a monetary regime is vulnerable to speculative attacks that take place over a short period rather than instantaneously. The speed at which the regime collapses, and the extent of reserve losses, are increasing in the central bank's explicit or implicit commitment to intervene in the foreign exchange market. Attacks are therefore ranked, from most to least severe, as follows: Exchange rate targeting, CPI inflation targeting, domestic nontradables inflation targeting, and money targeting. Under inflation targeting the size of the attack is increasing in the tradables consumption share. Mode of access: Internet Kumhof, Michael. Yan, Isabel. IMF Working Papers; Working Paper ; No. 2007/084 Full text available on IMF http://elibrary.imf.org/view/journals/001/2007/084/001.2007.issue-084-en.xml IMF e-Library