Does inflation targeting improve fiscal discipline?

Alexandru Minea and René Tapsoba

Journal of International Money and Finance, 2014, vol. 40, issue C, 185-203

Abstract: We explore the performances of inflation targeting (IT) adoption in terms of fiscal discipline (FD), while most existing studies focus exclusively on the role of FD as a precondition for IT adoption. Using a sample of developing and developed countries, we show that IT adoption exerts a positive and significant effect on FD, a result robust to a wide variety of alternative specifications. In addition, this effect is statistically significant only in developing countries, a result that may fuel the current debate regarding the relevance of IT adoption in general, and particularly for developing countries.

Keywords: Inflation targeting; Fiscal discipline; Propensity-score matching (search for similar items in EconPapers)
JEL-codes: E52 E58 E62 E63 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (87)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:40:y:2014:i:c:p:185-203

DOI: 10.1016/j.jimonfin.2013.10.002

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