IDEAS home Printed from https://ideas.repec.org/a/cup/intorg/v64y2010i04p695-717_00.html
   My bibliography  Save this article

The Effectiveness of Monetary Policy Anchors: Firm-Level Evidence

Author

Listed:
  • Broz, J. Lawrence
  • Plouffe, Michael

Abstract

Analyses of monetary policy posit that exchange-rate pegs, inflation targets, and central bank independence can help anchor private-sector inflation expectations. Yet there are few direct tests of this argument. We offer cross-national, micro-level evidence on the effectiveness of monetary anchors in controlling private-sector inflation concerns. Using firm-level data from eighty-one countries (approximately 10,000 firms), we find evidence that “international†anchors (exchange-rate commitments) correlate significantly with a substantial reduction in private-sector concerns about inflation while “domestic†anchors (inflation targeting and central bank independence) do not. Our conjecture is that private-sector inflation expectations are more responsive to exchange-rate anchors because they are more transparent, more constraining, and more costly than domestic anchoring arrangements.

Suggested Citation

  • Broz, J. Lawrence & Plouffe, Michael, 2010. "The Effectiveness of Monetary Policy Anchors: Firm-Level Evidence," International Organization, Cambridge University Press, vol. 64(4), pages 695-717, October.
    • Handle: RePEc:cup:intorg:v:64:y:2010:i:04:p:695-717_00
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S0020818310000196/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Petrevski, Goran, 2023. "Macroeconomic Effects of Inflation Targeting: A Survey of the Empirical Literature," EconStor Preprints 271122, ZBW - Leibniz Information Centre for Economics.
    2. Goran Petrevski, 2023. "Macroeconomic Effects of Inflation Targeting: A Survey of the Empirical Literature," Papers 2305.17474, arXiv.org.
    3. Nguyen Dinh Hoan, 2022. "Nexus among Green Energy Investment, World Oil Price, Monetary Policy and Business Performance: Evidence from Energy Companies on the Vietnamese Stock Exchange," International Journal of Energy Economics and Policy, Econjournals, vol. 12(6), pages 404-411, November.
    4. Martin Stojanovikj & Goran Petrevski, 2024. "Inflation targeting and disinflation costs in Emerging Market economies," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 51(1), pages 283-312, February.
    5. Michaël Aklin & Eric Arias & Julia Gray, 2022. "Inflation concerns and mass preferences over exchange‐rate policy," Economics and Politics, Wiley Blackwell, vol. 34(1), pages 5-40, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:intorg:v:64:y:2010:i:04:p:695-717_00. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/ino .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.