Even the emerging countries with inflation targeting regimes were forced to make their systems more flexible to face the new environment. In the end, we all operate under similar principles, but are surrounded by different realities, circumstances and idiosyncrasies. In the case of small open economies the job becomes even more comprehensive from a monetary policy perspective.
Emerging economies need to achieve macroeconomic and financial stability, develop capital markets, deal with fewer and less developed policy instruments, with fiscal, external and financial dominance, and build credibility, all at the same time. We often lack developed economies’ room to implement counter-cyclical fiscal and monetary policies.