Inflation Targeting Twenty Years on: Where, When, Why, With what Effects, What lies ahead?

Klaus Schmidt-Hebbel

No 360, Documentos de Trabajo from Instituto de Economia. Pontificia Universidad Católica de Chile.

Abstract: This paper looks back at 20 years of inflation targeting (IT) in the world, reviewing previous findings and reporting new cross-country and panel-data evidence on the determinants or IT regime choice and the results of IT adoption. After describing the where and when of IT adoption, the paper assesses the determinants of why countries choose this monetary regime against alternative candidates. Which have been the main results under IT? Next the paper focuses on several dimensions of monetary policy performance under IT. One is target achievement; beyond measuring cross-country differences in target deviations, the paper assesses empirically what lies behind those deviations. Two, it reviews monetary policy efficiency more broadly, comparing output and inflation volatility under IT to volatility observed in non-IT experiences. Three, it surveys descriptive evidence on monetary policy transparency attained under IT in comparison to other monetary regimes. A discussion of the very important challenges posed by the recent boom-and-bust cycle to IT close the paper.

Keywords: Inflation targeting; inflation; monetary regimes (search for similar items in EconPapers)
JEL-codes: C53 E31 E52 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:ioe:doctra:360

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