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Does Inflation Targeting Make a Difference?

In: Inflation Targeting: Desing, Performance, Challenges

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Author Info

  • Vittorio Corbo

    (Centro de Estudios Públicos)

  • Óscar Landerretche

    (Universidad de Chile)

  • Klaus Schmidt-Hebbel

    (Pontificia Universidad Católica de Chile)

Abstract

Yes, as inferred from panel evidence for inflation-targeting countries and a control group of high-achieving industrial countries that do not target inflation. Our evidence suggests that inflation targeting helps countries achieve lower inflation in the long run, have a smaller inflation response to oil-price and exchange-rate shocks, strengthen monetary policy independence, improve monetary policy efficiency, and obtain inflation outcomes closer to target levels. Some benefits of inflation targeting are larger when inflation targeters have achieved disinflation and are able to make their inflation targets stationary. Despite these favorable results for inflation targeting, our evidence generally does not suggest that countries that adopt inflation targeting have attained better monetary policy performance relative to our control group of highly successful non-inflation targeters. However, inflation targeting does seem to help all country groups to move toward the performance of the control group. The performance attained by industrial-country inflation targeters generally dominates the performance of emerging-economy inflation targeters and is similar to that of industrial non-inflation targeting countries.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

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This chapter was published in: Norman Loayza & Raimundo Soto & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.) Inflation Targeting: Desing, Performance, Challenges, , chapter 5, pages 221-270, 2002.

This item is provided by Central Bank of Chile in its series Central Banking, Analysis, and Economic Policies Book Series with number v05c05pp221-270.

Handle: RePEc:chb:bcchsb:v05c05pp221-270

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  1. Po co bankom centralnym cel inflacyjny
    by k.mokrzycka in Obserwator Finansowy on 2012-02-27 05:29:46
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