Does Inflation Targeting Matter for Output Growth? Evidence from Industrial and Emerging Economies
This paper examines the effects of inflation targeting (IT) on output growth over the "globalization years" of 1986-2004. Employing static panel data methods that control for traditional growth determinants, trade openness and financial globalization, the paper finds that the adoption of a fully fledged IT regime results in higher output income per capita for industrial and emerging economies. However, under dynamic model specifications, the estimated long-run output impact of inflation targeting for emerging market economies is found to be lower than in the case of static models. We argue that this might be due to the long lags until the full effects of greater credibility are felt in the real economy and the fact that emerging market economies adopted the regime much later than industrial economies.
| Main Authors: | , , |
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| Format: | Journal Article biblioteca |
| Language: | EN |
| Published: |
2011
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| Subjects: | Macroeconomics: Production E230, Price Level, Inflation, Deflation E310, Monetary Policy E520, Macroeconomic Analyses of Economic Development O110, Fiscal and Monetary Policy in Development O230, |
| Online Access: | http://hdl.handle.net/10986/4781 |
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