Abstract
This study attempts to investigate the adoption of inflation targeting framework in Vietnam. This work is done by examining the satisfaction of one crucial prerequisite of inflation targeting: There is the existence of predictable and stable linkages between monetary policy instruments and inflation outcomes. The Johansen multivariate cointegration procedure and Vector Error Correction Model (VECM) approach are used to check the relationship between monetary policy instruments and inflation, and the findings point out that there exists the existence of stable and predictable linkage between monetary policy instruments and inflation in Viet Nam. However, the relationship is too weak. As a result, Viet Nam is yet a candidate for adopting inflation targeting framework.
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