In Search of Successful Inflation Targeting: Evidence From An Inflation Targeting Index

Yanliang Miao

No 2009/148, IMF Working Papers from International Monetary Fund

Abstract: In a first attempt to treat inflation targeting (IT) as a continuous variable, we construct IT subindices for 21 full-fledged ITers on three dimensions: flexibility, transparency, and explicitness. Comparing flexibility and transparency we find that (1) the impact of flexibility on both the mean and variation of inflation is more quadratic than that of transparency; (2) after adding the transparency index, the impact of flexibility is no longer significant. The significant and negative association between transparency and the level and variation of inflation is confirmed when we check for robustness by controlling for disinflation stage, subsampling, instrumental variable estimation, and principal component analysis (PCA).

Keywords: WP; IT index; Inflation Targeting; Transparency; Flexibility; Factor Analysis; IT indices; inflation expectation; treats IT; inflation targeting Index; website coverage; frontier country; IT framework; inflation targeting index consist; inflation report; term IT; inflation variation; inflation dynamics; Inflation; Disinflation; Central bank autonomy; Institutional arrangements for revenue administration; Africa (search for similar items in EconPapers)
Pages: 35
Date: 2009-07-01
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Citations: View citations in EconPapers (8)

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