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Is price stability enough? Macroeconomic performance of inflation targeting in developing countries

Author

Listed:
  • Metin Ozdemir
  • Selim Tuzunturk

Abstract

Since the beginning of the 1990s, both industrialised and developing countries have adopted inflation targeting as a monetary policy strategy. Their central banks have designed their legal mandates to instutionalise monetary policy to aim only at price stability. In this sense, price stability is accepted as a pre-condition of sustainable growth and employment. In this study, we investigated the relationship between inflation and growth for 13 developing countries, which had already adopted inflation targeting over the period 2001–2005. Panel estimations consistently suggest that higher macroeconomic performance in terms of sustainable growth cannot be accomplished through inflation targeting alone.

Suggested Citation

  • Metin Ozdemir & Selim Tuzunturk, 2009. "Is price stability enough? Macroeconomic performance of inflation targeting in developing countries," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 1(4), pages 352-372.
  • Handle: RePEc:ids:ijsuse:v:1:y:2009:i:4:p:352-372
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    References listed on IDEAS

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