Inflation targeting: Genuine effects or publication selection bias?

This paper uses a meta-regression analysis (MRA) to evaluate the impact of publication selection bias as for the macroeconomic effects of inflation targeting (IT) – a popular approach to implementing monetary policy – documented in the existing literature. Using 8,059 point estimates from 113 studies, we show that a significant part of the documented positive effects of IT on inflation and, to some extent, output growth volatility, is in fact due to publication selection bias. In particular, results pointing to lower inflation volatility and higher real GDP growth tend to be favored by researchers, as well as those pointing to statistically significant macroeconomic effects. However, even after controlling for these two types of biases, we find IT to be correlated with lower inflation and higher real GDP growth. Differently, the evidence on the IT-inflation volatility relationship is found to be less clear.