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Does Inflation Targeting Work Well? Evidence from CEE Countries

Author

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  • Chen Wang

    () (Research School of Finance (RSFAS), Australian National University, Canberra
    Division of Science and Technology, United International College, Zhuhai, China)

Abstract

This article examines the effects of inflation targeting (IT) policy on inflation and output performance. I employ the propensity score matching method for the sample of CEE countries from 1990 to 2010. The evidence suggests that the IT regime does not have a significant effect on the inflation level or the inflation volatility; however, the IT framework can help to increase GDP per capita. The effects on inflation indicators are inconsistent with previous studies. The results are robust to different methodologies.

Suggested Citation

  • Chen Wang, 2016. "Does Inflation Targeting Work Well? Evidence from CEE Countries," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 66(3), pages 375-392, September.
  • Handle: RePEc:aka:aoecon:v:66:y:2016:i:3:p:375-392
    Note: I am greatly indebted to Professor Renée Fry-McKibbin and Dr. Gaurab Ayal for their helpful suggestions and advice. I am also grateful to the two anonymous referees for their comments. All remaining errors are my own.
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    References listed on IDEAS

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    1. Arminio Fraga & Ilan Goldfajn & André Minella, 2004. "Inflation Targeting in Emerging Market Economies," NBER Chapters,in: NBER Macroeconomics Annual 2003, Volume 18, pages 365-416 National Bureau of Economic Research, Inc.
    2. Frederic S. Mishkin, 2004. "Can Inflation Targeting Work in Emerging Market Countries?," NBER Working Papers 10646, National Bureau of Economic Research, Inc.
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    5. Svensson, Lars E. O., 1997. "Inflation forecast targeting: Implementing and monitoring inflation targets," European Economic Review, Elsevier, vol. 41(6), pages 1111-1146, June.
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    7. de Mendonça, Helder Ferreira & de Guimarães e Souza, Gustavo José, 2012. "Is inflation targeting a good remedy to control inflation?," Journal of Development Economics, Elsevier, vol. 98(2), pages 178-191.
    8. Scott Roger, 2009. "Inflation Targeting at 20 - Achievements and Challenges," IMF Working Papers 09/236, International Monetary Fund.
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    15. Piotr Ciżkowicz & Andrzej Rzońca, 2015. "Inflation Targeting and its Discontents: The Case of Poland," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 65(supplemen), pages 107-122, December.
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    More about this item

    Keywords

    inflation; inflation targeting; CEE countries; propensity score matching;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • 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

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