IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-14-00770.html
   My bibliography  Save this article

Efficiency of monetary policy under inflation targeting

Author

Listed:
  • Abdelkader Aguir

    () (Institute of Political Studies of Grenoble and Faculty of Economic and Management Sciences of Sousse)

  • Mounir Smida

    () (Faculty of Economic and Management Sciences of Sousse (Tunisia))

Abstract

The policy of inflation targeting is a monetary regime which seeks inflation. His practice was marked by a high stability observed. A debate emerged on the effectiveness and economic performance of this regime. Many searches are interested in this issue without being able to even reach an ultimate consensus. The objective of this paper is to contribute to this debate by clarifying the origin of this monetary regime and by proposing, then, our own quantitative analysis grid. At first, we discusses the theoretical framework of the inflation targeting relating to these conceptual and analytical aspects that seem to complete the reflection on the earlier antinomy. The analysis then focuses on empirical verification. In drawing on the work of Cecchetti and Krause (2002), Flores-Lagoons and Krause (2006) and Mishkin and Schmidt Hebbel (2007), we estimate efficient frontier: inflation variability - output variability, which allows us to deduce the measurement of economic performance and monetary policy efficiency measure.

Suggested Citation

  • Abdelkader Aguir & Mounir Smida, 2015. "Efficiency of monetary policy under inflation targeting," Economics Bulletin, AccessEcon, vol. 35(1), pages 788-813.
  • Handle: RePEc:ebl:ecbull:eb-14-00770
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2015/Volume35/EB-15-V35-I1-P83.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Kenneth Rogoff, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, Oxford University Press, vol. 100(4), pages 1169-1189.
    2. Joshua Aizenman & Daniel Riera-Crichton, 2008. "Real Exchange Rate and International Reserves in an Era of Growing Financial and Trade Integration," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 812-815, November.
    3. Jean-Paul Pollin & Alexis Penot, 1999. "Construction d'une règle monétaire pour la "zone euro"," Revue Économique, Programme National Persée, vol. 50(3), pages 535-546.
    4. Barro, Robert J. & Gordon, David B., 1983. "Rules, discretion and reputation in a model of monetary policy," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 101-121.
    5. Frederic S. Miskin & Klaus Schmidt-Hebbel, 2007. "Does Inflation Targeting Make a Difference?," Central Banking, Analysis, and Economic Policies Book Series,in: Frederic S. Miskin & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.), Monetary Policy under Inflation Targeting, edition 1, volume 11, chapter 9, pages 291-372 Central Bank of Chile.
    6. Clarida, Richard H, 2001. "The Empirics of Monetary Policy Rules in Open Economies," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 6(4), pages 315-323, October.
    7. Frederic S. Mishkin, 2000. "Inflation Targeting in Emerging-Market Countries," American Economic Review, American Economic Association, vol. 90(2), pages 105-109, May.
    8. Rose, Andrew K., 2007. "A stable international monetary system emerges: Inflation targeting is Bretton Woods, reversed," Journal of International Money and Finance, Elsevier, vol. 26(5), pages 663-681, September.
    9. Ho, Wai-Ming, 1996. "Imperfect Information, Money, and Economic Growth," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 578-603, November.
    10. Gill Hammond, 2012. "State of the art of inflation targeting," Handbooks, Centre for Central Banking Studies, Bank of England, edition 4, number 29.
    11. Ben S. Bernanke & Frederic S. Mishkin, 1997. "Inflation Targeting: A New Framework for Monetary Policy?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 97-116, Spring.
    12. Lòpez-Villavicencio, Antonia & Mazier, Jacques & Saadaoui, Jamel, 2012. "Temporal dimension and equilibrium exchange rate: A FEER/BEER comparison," Emerging Markets Review, Elsevier, vol. 13(1), pages 58-77.
    13. Paul Beaudry & Mustafa Caglayan & Fabio Schiantarelli, 2001. "Monetary Instability, the Predictability of Prices, and the Allocation of Investment: An Empirical Investigation Using U.K. Panel Data," American Economic Review, American Economic Association, vol. 91(3), pages 648-662, June.
    14. Hove, Seedwell & Tchana Tchana, Fulbert & Touna Mama, Albert, 2017. "Do monetary, fiscal and financial institutions really matter for inflation targeting in emerging market economies?," Research in International Business and Finance, Elsevier, vol. 39(PA), pages 128-149.
    15. Carlos Capistrán & Manuel Ramos-Francia, 2010. "Does Inflation Targeting Affect the Dispersion of Inflation Expectations?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(1), pages 113-134, February.
    16. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    17. Atish R. Ghosh & Jonathan David Ostry & Charalambos G Tsangarides, 2011. "Exchange Rate Regimes and the Stability of the International Monetary System," IMF Occasional Papers 270, International Monetary Fund.
    18. Jean-Baptiste Desquilbet & Patrick Villieu, 1998. "L'indépendance de la Banque centrale peut-elle être contreproductive ? Une illustration en économie ouverte," Revue Économique, Programme National Persée, vol. 49(6), pages 1415-1434.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. repec:cbk:journl:v:7:y:2018:i:3:p:91-110 is not listed on IDEAS
    2. repec:eco:journ1:2017-04-53 is not listed on IDEAS
    3. repec:uii:journl:v:9:y:2017:i:2:p:138-149 is not listed on IDEAS

    More about this item

    Keywords

    Emerging economics; Inflation targeting; monetary policy; efficiency of monetary policy; economic performance;

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General

    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:ebl:ecbull:eb-14-00770. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John P. Conley). General contact details of provider: .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.