Comparative case studies of the effects of inflation targeting in emerging economies

Wang-Sheng Lee

Oxford Economic Papers, 2011, vol. 63, issue 2, 375-397

Abstract: This paper examines the question of whether inflation targeting is an effective policy tool in emerging economies using a novel non-experimental evaluation approach. In particular, we adopt synthetic control methods to assess the effect that inflation targeting has had on each emerging economy that adopted such policies in the 1990s and 2000s. The evidence suggests that inflation targeting helped Colombia, the Czech Republic, Hungary and Poland reduce their inflation rates. Although Chile is often regarded as a poster child for inflation targeting policies in emerging economies, no significant reductions in inflation levels were found when a later policy start date some analysts believe to be more reflective of the true policy adoption date was used. Copyright 2011 Oxford University Press 2010 All rights reserved, Oxford University Press.

Date: 2011
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