Inflation targeting in emerging economies: Panel evidence

This paper shows there is no evidence that the inflation targeting regime (IT) improves economic performance as measured by the behavior of inflation and output growth in developing countries. The control of common time effects results in less negative and less significant IT impacts on inflation, i...

Full description

Saved in:
Bibliographic Details
Published in:Journal of development economics 2010-03, Vol.91 (2), p.198-210
Main Authors: Brito, Ricardo D., Bystedt, Brianne
Format: Article
Language:English
Subjects:
Central banks
Developing countries
Economic growth
Emerging economies
Emerging markets
Inflation
Inflation expectations
Inflation targeting
Inflation targeting Inflation Output growth Emerging economies
Information technology
LDCs
Longitudinal studies
Monetary policy
Output
Output growth
Output rate
Studies
Transition economies
Volatility
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This paper shows there is no evidence that the inflation targeting regime (IT) improves economic performance as measured by the behavior of inflation and output growth in developing countries. The control of common time effects results in less negative and less significant IT impacts on inflation, inflation volatility and output growth volatility than previously found in the literature. Additionally, our analysis shows robust evidence of lower output growth during IT adoption. On balance, although lower long-run mean inflation signals that the central banks of emerging economies with inflation targeting are more inflation-averse, the costs of disinflation have not been lower than under other monetary regimes.
ISSN:0304-3878
1872-6089
DOI:10.1016/j.jdeveco.2009.09.010