Inflation targeting and the cyclicality of monetary policy

John Thornton and Chrysovalantis Vasilakis

Finance Research Letters, 2017, vol. 20, issue C, 296-302

Abstract: We assess whether the adoption of inflation targeting (IT) frameworks has facilitated countercyclical monetary policies in a sample of 90 industrial and developing economies, 22 of which have adopted IT. Using propensity score matching methods, we show that the average treatment effect of IT has a statistically significant and quantitatively quite large effect in facilitating a more countercyclical monetary policy in IT adopting countries.

Keywords: Inflation targeting; Monetary policy cyclicality; Treatment effect; Propensity score matching (search for similar items in EconPapers)
JEL-codes: E4 E5 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:20:y:2017:i:c:p:296-302

DOI: 10.1016/j.frl.2016.10.012

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