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Inflation targeting and product market deregulation

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  • Moretti, Laura

Abstract

I evaluate the effect of inflation targeting on inflation and how it interacts with product market deregulation during the disinflationary process in the 1990s. Using a sample of 21 OECD countries, I show that, after controlling for product market deregulation, the effect of inflation targeting is quantitatively important and statistically significant. Moreover, product market deregulation also matters in particular in countries that adopted an inflation targeting regime. I propose a New Keynesian Phillips curve with an explicit role for market deregulation to rationalize the empirical evidence.

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  • Moretti, Laura, 2012. "Inflation targeting and product market deregulation," CFS Working Paper Series 2012/01, Center for Financial Studies (CFS).
    • Handle: RePEc:zbw:cfswop:201201
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    1. De Schryder, Selien & Peersman, Gert & Wauters, Joris, 2020. "Wage indexation and the monetary policy regime," Journal of Macroeconomics, Elsevier, vol. 63(C).
    2. Moretti, Laura, 2014. "The determinants of inflation differentials in the euro area," CFS Working Paper Series 451, Center for Financial Studies (CFS).

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    More about this item

    Keywords

    Inflation Targeting; Product Market Deregulation; Difference in Difference;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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