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Is transition to inflation targeting good for growth?

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  • Galina Hale
  • Alexej Philippov

Abstract

Inflation targeting is often considered the most appropriate monetary policy framework for central banks seeking price stability. While a target can help stabilize inflation, the implications for a country?s growth are less clear. Advanced economies experienced higher economic growth immediately following the transition to inflation targeting. However, developing economies experienced only modest gains that were close to their trend growth. One explanation is that transitioning to a low-inflation regime can be more costly for less stable countries that have higher inflation expectations and less credible policies.

Suggested Citation

  • Galina Hale & Alexej Philippov, 2015. "Is transition to inflation targeting good for growth?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
  • Handle: RePEc:fip:fedfel:00054
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    File URL: http://www.frbsf.org/economic-research/publications/economic-letter/2015/may/inflation-targeting-advanced-developing-countries/el2015-14.pdf
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    References listed on IDEAS

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    1. Refet S. Gürkaynak & Andrew T. Levin & Eric T. Swanson, 2006. "Does inflation targeting anchor long-run inflation expectations? evidence from long-term bond yields in the U.S., U.K., and Sweden," Working Paper Series 2006-09, Federal Reserve Bank of San Francisco.
    2. Gill Hammond, 2012. "State of the art of inflation targeting," Handbooks, Centre for Central Banking Studies, Bank of England, edition 4, number 29, April.
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    Cited by:

    1. F. Kartaev S. & Ф. Картаев С., 2018. "Оценка Влияния Монетарной Политики На Экономический Рост Для Различных Групп Стран // The Assessment Of The Impact Of Monetary Policy On Economic Growth In Different Groups Of Countries," Финансы: теория и практика/Finance: Theory and Practice // Finance: Theory and Practice, ФГОБУВО Финансовый университет при Правительстве Российской Федерации // Financial University under The Government of Russian Federation, vol. 22(1), pages 50-63.

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