Does inflation targeting reduce sovereign risk? Further evidence

John Thornton and Chrysovalantis Vasilakis

Finance Research Letters, 2016, vol. 18, issue C, 237-241

Abstract: We examine whether adopting an inflation-targeting regime helps reduce sovereign risk premia in a sample of 64 advanced and developing countries for the period 1985–2012. We address the self-selection problem of policy adoption by applying a variety of propensity score matching methods. The results provide evidence that inflation targeting lowers sovereign risk.

Keywords: Inflation targeting; Sovereign risk premia; Treatment effect; Propensity score matching (search for similar items in EconPapers)
JEL-codes: E58 F34 H63 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:18:y:2016:i:c:p:237-241

DOI: 10.1016/j.frl.2016.04.022

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