BIS central bankers’ speeches  3  cost.9 Almost equally-large gains were reported for children who enrolled in Head Start, a federally-funded nationwide preschool program for low-income children.10 Related literature on neighborhood effects has found that labor market outcomes for adults are also significantly affected by the type of neighborhoods where people reside. The role of labor market networks and referrals has been amply-demonstrated as affecting the likelihood of finding a job, the quality of matches between employers and workers, and the earnings associated with these jobs. Several studies show that many of these networks have a significant local neighborhood component. Further, workers who live in neighborhoods with higher-quality networks are more likely to move to jobs with higher wages.11 Let me now turn to policies aimed at improving upward income mobility through increased residential mobility. There is some striking evidence that shows providing more opportunities for families to move to wealthier areas may improve upward mobility while also being costeffective.12 In the mid-1990s, as part of a lottery-based housing mobility experiment sponsored by HUD – called the Moving to Opportunity (MTO) experiment – families in highpoverty housing projects were given housing vouchers to move to lower-poverty mixedincome neighborhoods. While this project appears to have had little impact on the economic outcomes of the adults and older children, the program appears to have had remarkable long-term impacts on children who moved to such neighborhoods at a young age, with the impacts increasing by the number of childhood years they ended up living in the better environment.

There are certain preconditions to be met for a successful implementation of inflation targeting regime. First central bank must have strong team of economists, well functioning transmission channels and the instrument to guide the policies. In this respect the Central Bank of Turkey reorganized its Research and Monetary Policy Department and increased the number of economists with PhD’s. We have strengthened the research capacity and the analytical power of the Department. At the start of the program, high debt to GDP ratio was a problem for debt sustainability and there were high uncertainties about the transmission mechanism. And also due to the high and chronic 30 years of inflation there was not a solid track record of credibility. Between 2002 and 2005, the period of implicit inflation-targeting  1  Trichet, J.C. (2007). “Hearing Before the Economic and Monetary Affairs Committee of the European Parliament”. Brussels, March 21, 2007. BIS Review 57/2007  3  regime, the Central Bank tried to build up its credibility by setting inflation targets together with the Government and achieving them. During the last 5 years’ period debt to GDP ratio fell to sustainable levels, with significant developments in credit markets and a downfall in dollarization levels, which strengthened the transmission mechanism to a large extent. Also the MPC assumed the role of a decision making body, from an advisory one. The currency reform was also a necessary condition for successful IT implementation as the currency with many zeros kept the inflation memories in the public mind alive.