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An Assessment of Inflation Targeting

Author

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  • Costas Milas

    (University of Liverpool)

  • Theologos Dergiades

    (Department of Economics, University of Macedonia)

  • Theodore Panagiotidis

    (Department of Economics, University of Macedonia)

  • Georgios Papapanagiotou

    (Department of Economics, University of Macedonia)

Abstract

TThe effectiveness of inflation targeting is linked to the stationarity properties of inflation. Without making apriori assumptions about the order of integration, we examine whether there is a change in the inflation persistence in one hundred and twenty-seven countries (developed and developing) using monthly data over the 1970-2021 period. For the inflation targeters, we find that the endogenously identified break dates are not consistent with the formal adoption of IT. Logit analysis reveals that inflation targeters do not experience an increased probability of a change in inflation persistence. The quality of institutions emerges as more significant for taming inflation.

Suggested Citation

  • Costas Milas & Theologos Dergiades & Theodore Panagiotidis & Georgios Papapanagiotou, 2024. "An Assessment of Inflation Targeting," Discussion Paper Series 2024_05, Department of Economics, University of Macedonia, revised May 2024.
    • Handle: RePEc:mcd:mcddps:2024_05
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    More about this item

    Keywords

    persistence change; inflation targeting.;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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