Coping with the recent financial crisis: Did inflation targeting make any difference?

Armand Fouejieu

International Economics, 2013, issue 133, 72-92

Abstract: The effects of the 2008/2009 financial crisis went largely among financial markets and hit the real economy, generating one of the greatest global economic shocks. The purpose of this study is to investigate whether inflation targeting has made a difference during this crisis. First, we put forward some arguments suggesting that inflation targeters can be expected to perform better when facing a global shock. Applying difference in difference in the spirit of Ball and Sheridan (2005), we assess the difference between targeters and non-targeters and find that there is no significant difference as regards inflation rate and GDP growth. However, the rise in real interest rate and inflation volatility during the crisis has been significantly less pronounced for targeters.

Keywords: Inflation targeting; Financial crisis; Macroeconomic performances; Difference in difference (search for similar items in EconPapers)
JEL-codes: E00 E4 E6 (search for similar items in EconPapers)
Date: 2013
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:cii:cepiie:2013-q1-133-5

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