Evaluating the performance of inflation targeting regime in three Asian economies
We conduct empirical analysis in evaluating the performance of inflation targeting (IT) in three emerging East-Asian economies that have implemented this regime. These three economies are Korea, Philippines and Thailand. The performance of inflation targeting regime is evaluated by comparing the economic achievement and structure changed between the pre- and post- IT periods. In particular, evaluation is focused on the inter-relationship between inflation and output growth / gap in these emerging economies between the pre- and post-IT periods. The inflation rate and the change in the macroeconomic variables are observed through country specific data. A bivariate GARCH (1,1) model is applied to study the inter-relationship between inflation and output gap. The results also enable us to detect if IT regime induces disinflation cost by causing lower growth or higher output gap. We compare the results of GARCH with the results of structural VAR for robustness checking. Both analyses provide consistent results. We observe lower inflation rate in the post-IT period. However, there is no significant correlation between inflation and output gap and we find no evidence that lower inflation causes lower growth or higher output gap. Both output gap and inflation are determined mainly by their own impulses. Besides, output gap is more persistent than inflation. We conclude that IT regime has improved the economies of these countries.
Volume (Year): 4 (2012)
Issue (Month): 2 (September)
|Contact details of provider:|| Postal: |
Phone: + 90 312 447 51 95
Fax: + 90 312 447 51 95
Web page: http://www.era.org.tr/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- J. H. Green, 1996. "Inflation Targeting; Theory and Policy Implications," IMF Working Papers 96/65, International Monetary Fund.
- Laurence Ball, 1998.
"Policy Rules for Open Economies,"
NBER Working Papers
6760, National Bureau of Economic Research, Inc.
- Adolfson, Malin, 2002.
"Incomplete Exchange Rate Pass-Through and Simple Monetary Policy Rules,"
Working Paper Series
136, Sveriges Riksbank (Central Bank of Sweden).
- Adolfson, Malin, 2007. "Incomplete exchange rate pass-through and simple monetary policy rules," Journal of International Money and Finance, Elsevier, vol. 26(3), pages 468-494, April.
- Adolfson, Malin, 2001. "Incomplete Exchange Rate Pass-Through and Simple Monetary Policy Rules," SSE/EFI Working Paper Series in Economics and Finance 478, Stockholm School of Economics.
- Vega, Marco & Winkelried, Diego, 2004.
"Inflation Targeting and Inflation Behavior: A Successful Story?,"
838, University Library of Munich, Germany.
- Marco Vega & Diego Winkelried, 2005. "Inflation Targeting and Inflation Behavior: A Successful Story?," International Journal of Central Banking, International Journal of Central Banking, vol. 1(3), December.
- Marco Vega & Diego Winkelried, 2005. "Inflation Targeting and Inflation Behavior: A Successful Story?," Macroeconomics 0502026, EconWPA.
- Honda, Yuzo, 2000. "Some tests on the effects of inflation targeting in New Zealand, Canada, and the UK," Economics Letters, Elsevier, vol. 66(1), pages 1-6, January.
- Frederic S. Mishkin & Adam S. Posen, 1997.
"Inflation targeting: lessons from four countries,"
Economic Policy Review,
Federal Reserve Bank of New York, issue Aug, pages 9-110.
- John H. Green, 1996. "Inflation Targeting: Theory and Policy Implications," IMF Staff Papers, Palgrave Macmillan, vol. 43(4), pages 779-795, December.
- Carlos Eduardo S. Gonçalves & Alexandre Carvalho, 2009. "Inflation Targeting Matters: Evidence from OECD Economies' Sacrifice Ratios," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(1), pages 233-243, 02.
- Ricardo Hausmann & Ugo Panizza & Roberto Rigobon, 2004.
"The Long-Run Volatility Puzzle of the Real Exchange Rate,"
NBER Working Papers
10751, National Bureau of Economic Research, Inc.
- Hausmann, Ricardo & Panizza, Ugo & Rigobon, Roberto, 2006. "The long-run volatility puzzle of the real exchange rate," Journal of International Money and Finance, Elsevier, vol. 25(1), pages 93-124, February.
- Hiroyuki Taguchi & Chizuru Kato, 2011.
"Assessing the performance of inflation targeting in East Asian economies,"
Asian-Pacific Economic Literature,
Asia Pacific School of Economics and Government, The Australian National University, vol. 25(1), pages 93-102, 05.
- Hiroyuki Taguchi & Chizuru Kato, 2010. "Assessing the Performance of Inflation Targeting in East Asian economies," Macroeconomics Working Papers 23078, East Asian Bureau of Economic Research.
- Ching-Chong Lai & Juin-Jen Chang, 2001. "A Note on Inflation Targeting," The Journal of Economic Education, Taylor & Francis Journals, vol. 32(4), pages 369-380, January.
- Engle, Robert F. & Kroner, Kenneth F., 1995. "Multivariate Simultaneous Generalized ARCH," Econometric Theory, Cambridge University Press, vol. 11(01), pages 122-150, February.
- Ferya Kadioglu & Nilufer Ozdemir & Gokhan Yilmaz, 2000. "Inflation Targeting in Developing Countries," Discussion Papers 0006, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
- Essahbi Essaadi & Zied Ftiti, 2008.
"The inflation Targeting effect on the inflation series: A New Analysis Approach of evolutionary spectral analysis,"
0832, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
- Zied Ftiti & Essahbi Essaadi, 2014. "The inflation Targeting effect on the inflation series: A New Analysis Approach of evolutionary spectral analysis," Working Papers 2014-516, Department of Research, Ipag Business School.
- Essahbi Essaadi & Zied Ftiti, 2008. "The inflation Targeting effect on the inflation series: ANew Analysis Approach of evolutionary spectral analysis," Post-Print halshs-00355637, HAL.
- Takashi Senda & Julie K Smith, 2008. "Inflation History And The Sacrifice Ratio: Episode-Specific Evidence," Contemporary Economic Policy, Western Economic Association International, vol. 26(3), pages 409-419, 07.
- Lee, Jim, 1999. "The inflation and output variability tradeoff: evidence from a Garch model," Economics Letters, Elsevier, vol. 62(1), pages 63-67, January.
When requesting a correction, please mention this item's handle: RePEc:erh:journl:v:4:y:2012:i:2:p:82-98. 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: (M. F. Cosar)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 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.