 Is inflation targeting a good remedy to control inflation?Helder de Mendonça () and Gustavo Jose de Guimaraes e Souza Journal of Development Economics, 2012, vol. 98, issue 2, 178-191 Abstract: Since the 1990s inflation targeting (IT) has been adopted by several central banks as a strategy for monetary policy. It is expected that the adoption of this monetary regime can reduce inflation and inflation volatility. This article is concerned with these issues and makes use of the Propensity Score Matching methodology on a sample of 180 countries for the period from 1990 to 2007. For analysis, the sample is split into two sets of countries (advanced and developing). The findings suggest that the adoption of IT is an ideal monetary regime for developing economies and, in addition to reducing inflation volatility, can drive inflation down to internationally acceptable levels. Regarding advanced economies, the adoption of IT does not appear to represent an advantageous strategy. In brief, the empirical results indicate that the adoption of IT is useful for countries that must enhance their credibility for the management of monetary policy. Keywords: Inflation targeting; Credibility; Propensity score matching (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:98:y:2012:i:2:p:178-191 DOI: 10.1016/j.jdeveco.2011.06.011 Access Statistics for this article Journal of Development Economics is currently edited by M. R. Rosenzweig More articles in Journal of Development Economics from Elsevier |
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