On the Endogeneity of Inflation Targeting: Preferences Over Inflation

Nicolás de Roux and Marc Hofstetter

No 8731, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE

Abstract: Over the last quarter of a century, inflation targeting has become a popular monetary regime. Nevertheless, empirical evaluations of IT have shown contradictory results. Part of the reason is that IT in and of itself constitutes an endogenous decision and thus needs to be properly instrumented. In this paper, we show that preferences over inflation constitute a crucial determinant of IT: countries exhibiting greater inflation aversion are more likely to adopt IT.

Keywords: Inflation targeting; Monetary Policy; Monetary Regimes (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 E61 (search for similar items in EconPapers)
Pages: 33
Date: 2011-02-20
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:col:000089:008731

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