The effects of key parameters of the monetary policy reaction function on economic growth

Makram El-Shagi and Paul Lukuliko Philemon

Macroeconomic Dynamics, 2026, vol. 30, -

Abstract: We examine how a more hawkish policy stance – defined as an above-median long-run inflation semi-elasticity of the policy rate – affects economic growth in 37 inflation-targeting (IT) countries. To this end, we estimate time-varying, bias-corrected forward-looking Taylor rules for all IT countries for which the data permit such estimation. Our results point to sizable growth effects, exceeding 0.8% annually, for countries with a more hawkish policy stance. This suggests that the growth benefits reported in the previous literature on inflation targeting are primarily driven by a small subset of countries that react more forcefully to inflation.

Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.cambridge.org/core/product/identifier/ ... type/journal_article link to article abstract page (text/html)

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:cup:macdyn:v:30:y:2026:i::p:-_41

Access Statistics for this article

More articles in Macroeconomic Dynamics from Cambridge University Press Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK.
Bibliographic data for series maintained by Kirk Stebbing ().