Macroeconomic performance of inflation targeting in European and Asian emerging economies

Milojko Arsić, Zorica Mladenović and Aleksandra Nojković

Journal of Policy Modeling, 2022, vol. 44, issue 3, 675-700

Abstract: The macroeconomic performance resulting from adopting an inflation targeting policy in emerging economies of Europe and Central Asia are examined. The research includes 26 countries in the period 1997–2019, with a special focus on the period 2008–2019. Our econometric analysis consists of two approaches: dynamic panel modeling and propensity score matching. The results suggest that macroeconomic performance has improved due to the inflation targeting monetary framework. We find that a policy of inflation targeting has been effective in reducing the inflation rate, inflation volatility, and GDP volatility. The results are particularly robust for the subperiod that started in 2008. Econometric results suggest that inflation targeting policy did not affect inflation persistence or GDP growth. Our results suggest that inflation targeting improves the macroeconomic performance of developing countries even when they only partially meet the standard requirements for its implementation.

Keywords: Inflation targeting; Monetary policy; Emerging economies; Dynamic panel model; Propensity score matching (search for similar items in EconPapers)
JEL-codes: C52 E31 E52 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0161893822000321
Full text for ScienceDirect subscribers only

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:eee:jpolmo:v:44:y:2022:i:3:p:675-700

DOI: 10.1016/j.jpolmod.2022.06.002

Access Statistics for this article

Journal of Policy Modeling is currently edited by A. M. Costa

More articles in Journal of Policy Modeling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().