measuring and targeting core inflation in a small open dollarized economy the peruvian case eduardo morón luis felipe zegarra first draft may 7 1998 revised version august 26 preliminary for comments abstract last years four latin american countries chile colombia mexico peru have switched to as main mechanism guide their monetary policies this paper we address some of basic questions regarding its implementation i which measure should use vs headline ii how forecastable are these measures iii effective is policy control behavior follows steps bryan cecchetti 1993 however all specific qualifications ability central bank might be eroded by currency substitution problems found that target cpi but conduct forecasting 12 month horizon problem does not seem impose severe restriction previously analyzed 1997 keywords jel
