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Inflation targeting on unemployment rates: a quantile treatment effect approach

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  • Ho-Chuan Huang
  • Chih-Chuan Yeh

Abstract

This article explores the treatment effects of inflation targeting (IT) on unemployment rates across a large panel of 74 countries over the 1980--2010 period. By addressing the 'self-selection' problem of policy adoption via a variety of propensity score matching algorithms, we first find that, on average, IT exerts no discernible effect on unemployment rates in the full sample. However, when the full sample is split into subgroups, the results strongly indicate that the adoption of IT is associated with higher (lower) unemployment rate in the industrial (developing) countries. Further outcome from a novel quantile treatment effects approach points out that the higher the unemployment rate is in the first place, the more harmful (beneficial) the implementation of IT becomes in the industrial (developing) subsample.

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  • Ho-Chuan Huang & Chih-Chuan Yeh, 2014. "Inflation targeting on unemployment rates: a quantile treatment effect approach," Applied Economics Letters, Taylor & Francis Journals, vol. 21(7), pages 453-458, May.
    • Handle: RePEc:taf:apeclt:v:21:y:2014:i:7:p:453-458
    DOI: 10.1080/13504851.2013.866198
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    2. Can Tansel TUGCU & Serdar OZTURK, 2015. "Bucharest University of Economic Studies, Romania," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(605), W), pages 105-112, Winter.
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    4. Meemken, Eva-Marie & Qaim, Matin, 2017. "Can Private Food Standards Promote Gender Equality in the Small Farm Sector?," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258088, Agricultural and Applied Economics Association.
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    6. Bao-We-Wal Bambe, 2023. "Inflation Targeting and Private Domestic Investment in Developing Countries," Post-Print hal-04227639, HAL.

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