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Is transition to inflation targeting good for growth?

Author

Listed:
  • Hale, Galina

    () (Federal Reserve Bank of San Francisco)

  • Philippov, Alexej

    (Moscow State University)

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

  • Hale, Galina & Philippov, Alexej, 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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    1. repec:scn:financ:y:2018:i:1:p:50-63 is not listed on IDEAS

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