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Inflation Targeting and Business Cycle Synchronization

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  • Flood, Robert P
  • Rose, Andrew K

Abstract

Inflation targeting seems to have a small but positive effect on the synchronization of business cycles; countries that target inflation seem to have cycles that move slightly more closely with foreign cycles. Thus the advent of inflation targeting does not explain the decoupling of global business cycles, for two reasons. Indeed business cycles have not in fact become less synchronized across countries.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7377.

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Date of creation: Jul 2009
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Handle: RePEc:cpr:ceprdp:7377

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Keywords: bilateral; data; empirical; GDP; insulation; regime;

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References

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  1. Michael Devereux & Charles Engel, 2000. "The Optimal Choice of Exchange-Rate Regime: Price-Setting Rules and Internationalized Production," Working Papers 0022, University of Washington, Department of Economics.
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Citations

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Cited by:
  1. Joakim Westerlund & Paresh K Narayan, 2012. "Does the choice of estimator matter when forecasting returns?," Financial Econometics Series 2012_01, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  2. Pierre L. Siklos, 2010. "Inflation Targeting: It'S Not Broke, It Doesn'T Need Fixing, But Can It Survive?," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 1(01), pages 59-80.
  3. Petr Rozmahel & Ladislava Grochová & Marek Litzman, 2014. "The effect of asymmetries in fiscal policy conducts on business cycle correlation in the EU," WWWforEurope Working Papers series 62, WWWforEurope.
  4. Minea, Alexandru & Tapsoba, René, 2014. "Does inflation targeting improve fiscal discipline?," Journal of International Money and Finance, Elsevier, vol. 40(C), pages 185-203.
  5. Chang, Koyin & Kim, Yoonbai & Tomljanovich, Marc & Ying, Yung-Hsiang, 2013. "Do political parties foster business cycles? An examination of developed economies," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 212-226.
  6. Erden, Lutfi & Ozkan, Ibrahim, 2014. "Determinants of international transmission of business cycles to Turkish economy," Economic Modelling, Elsevier, vol. 36(C), pages 383-390.
  7. Radoslaw Kurach, 2012. "Stocks, Commodities and Business Cycle Fluctuations – Seeking the Diversification Benefits," Equilibrium, Uniwersytet Mikolaja Kopernika, vol. 7, pages 101-116.
  8. Mathy, Gabriel P. & Meissner, Christopher M., 2011. "Business cycle co-movement: Evidence from the Great Depression," Journal of Monetary Economics, Elsevier, vol. 58(4), pages 362-372.
  9. Wälti, Sébastien, 2009. "Business cycle synchronicity, amplitude and the euro: one size does not yet fit all," MPRA Paper 21065, University Library of Munich, Germany.
  10. Antonio Pesce, 2013. "Is Decoupling in action?," ERSA conference papers ersa13p1252, European Regional Science Association.
  11. Wälti, Sébastien, 2010. "No decoupling, more interdependence: business cycle comovements between advanced and emerging economies," MPRA Paper 20869, University Library of Munich, Germany.
  12. Rados³aw Kurach, 2012. "Seeking The Diversification Benefits With Foreign Equities And Commodities – The Case Of Polish Investor," "e-Finanse", University of Information Technology and Management, Institute of Financial Research and Analysis, vol. 8(3), pages 26-36, October.
  13. Adolfo Barajas & Ralph Chami & Christian Ebeke & Sampawende J.-A. Tapsoba, 2012. "Workers’ Remittances," IMF Working Papers 12/251, International Monetary Fund.

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