How Do Middle-Income Countries Fare Under an Inflation Targeting Regime

Najib Khan ()
Additional contact information
Najib Khan: Prince Sultan University, Saudi Arabia

Journal of Economic Development, 2022, vol. 47, issue 4, 79-98

Abstract: Inflation-targeting regime, as a framework for monetary policy conduct, has been adopted by central banks in thirty countries. Some of these countries enjoy high incomes while others have middle incomes. In contrast to the development-based classification – often applied in the literature, thus ignoring income disparity – this study employs income-based classification. The objective is to investigate, using a panel of middle-income countries, whether inflation targeting is a good remedy for high inflation. In addition to the commonly used covariates in the literature, this study also includes in its covariate matrix the worldwide governance indicators as proxy for institutional quality. The findings exhibit a significant reduction of inflation among the inflation-targeting adopters compared to the non-adopting middle-income countries. The results are robust to the exclusion of high inflation episodes, and to using the alternative measures of inflation. The results are also robust to the post-estimation tests recommended for such empirical analysis.

Keywords: Inflation Targeting; Middle-Income Countries; Governance Institutions (search for similar items in EconPapers)
JEL-codes: E02 E31 E52 E58 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://jed.cau.ac.kr/archives/47-4/47-4-4.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:jecdev:0004

Access Statistics for this article

Journal of Economic Development is currently edited by Sung Y. Park

More articles in Journal of Economic Development from The Economic Research Institute, Chung-Ang University Room 1040, Building 310, Chung-Ang University, 84 Heukseok-ro, Dongjak-gu, Seoul 06974, South Korea. Contact information at EDIRC.
Bibliographic data for series maintained by Tram Nguyen ().