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Measuring inflation targeting's impact on the macroeconomy

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  • Jose Sanchez-Fung

Abstract

This article analyses inflation targeting's (IT) impact on key macroeconomic variables in Australia, Canada, Chile, Colombia, Israel, Korea, Mexico, New Zealand, Sweden and the United Kingdom in the spirit of Mishkin and Posen (1997). Across this sample, inflation and interest rates predicted from parsimonious, automatically reduced VARs consistently overestimate those observed following IT adoption.

Suggested Citation

  • Jose Sanchez-Fung, 2008. "Measuring inflation targeting's impact on the macroeconomy," Applied Economics Letters, Taylor & Francis Journals, vol. 15(13), pages 1027-1035.
    • Handle: RePEc:taf:apeclt:v:15:y:2008:i:13:p:1027-1035
    DOI: 10.1080/13504850600972410
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    References listed on IDEAS

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    1. Sims, Christopher A & Stock, James H & Watson, Mark W, 1990. "Inference in Linear Time Series Models with Some Unit Roots," Econometrica, Econometric Society, vol. 58(1), pages 113-144, January.
    2. Ben S. Bernanke & Michael Woodford, 2004. "The Inflation-Targeting Debate," NBER Books, National Bureau of Economic Research, Inc, number bern04-1, January.
    3. Ralf BRUEGGEMANN & Hans-Martin KROLZIG & Helmut LUETKEPOHL, 2002. "Comparison of Model Reduction Methods for VAR Processes," Economics Working Papers ECO2002/19, European University Institute.
    4. Ben S. Bernanke & Michael Woodford, 2004. "Introduction to "The Inflation-Targeting Debate"," NBER Chapters, in: The Inflation-Targeting Debate, pages 1-10, National Bureau of Economic Research, Inc.
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