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Monetary policy regimes and growth revisited: evidence from a de facto classification

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  • Kin-Ming Wong
  • Terence Tai-Leung Chong

Abstract

Pioneered by New Zealand in 1990, a growing number of countries have adopted the practice of inflation targeting, the international experience of which has been reported as satisfactory. However, existing empirical evidence fails to support inflation targeting as having a positive growth effect. To provide further evidence, this study adopts a new classification system for monetary policy regimes that allows the empirical estimation of the effect of inflation targeting on economic growth in comparison with its main alternative, exchange rate targeting. Our study, which covers more than 100 countries for the 35 years from 1974 to 2009, presents robust evidence that inflation targeting promotes economic growth.

Suggested Citation

  • Kin-Ming Wong & Terence Tai-Leung Chong, 2019. "Monetary policy regimes and growth revisited: evidence from a de facto classification," Oxford Economic Papers, Oxford University Press, vol. 71(4), pages 908-929.
    • Handle: RePEc:oup:oxecpp:v:71:y:2019:i:4:p:908-929.
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    File URL: http://hdl.handle.net/10.1093/oep/gpy068
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    Cited by:

    1. Helder Ferreira de Mendonça & Iven Silva Valpassos, 2022. "Combination of economic policies: how the perfect storm wrecked the Brazilian economic growth," Empirical Economics, Springer, vol. 63(3), pages 1135-1157, September.

    More about this item

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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