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Does Inflation Targeting Matter?
Author:
Niamh Sheridan null

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Laurence M. Ball null

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Series:
IMF Working Papers
Volume/Issue:
Volume 2003: Issue 129
Language:
English
Publication Date:
01 Jun 2003
DOI:
https://doi.org/10.5089/9781451855135.001
ISBN:
9781451855135
ISSN:
1018-5941
Pages:
36
Keywords:
WP; inflation targeting country; inflation-targeting dummy; unit inflation shock; inflation expectation; inflation targeters; OECD inflation forecast; Inflation Targeting Regime; inflation-targeting period; trend inflation; inflation persistence; Inflation; Inflation targeting; Corporate income tax; Production growth; Short term interest rates
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper asks whether inflation targeting improves economic performance, as measured by the behavior of inflation, output, and interest rates. We compare 7 OECD countries that adopted inflation targeting in the early 1990s to 13 that did not. After the early 1990s, performance improved along many dimensions for both targeting and nontargeting countries. In some cases, the targeters improved by more. However, these differences are explained by the fact that targeters performed worse than nontargeters before the early 1990s, and there is regression towards the mean. Once one controls for this, there is no evidence that inflation targeting improves performance.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund