Monetary policy regimes and growth revisited: evidence from a de facto classification

Kin Ming Wong () and Terence Tai Leung Chong

Oxford Economic Papers, 2019, vol. 71, issue 4, 908-929

Abstract: Pioneered by New Zealand in 1990, a growing number of countries have adopted the practice of inflation targeting, the international experience of which has been reported as satisfactory. However, existing empirical evidence fails to support inflation targeting as having a positive growth effect. To provide further evidence, this study adopts a new classification system for monetary policy regimes that allows the empirical estimation of the effect of inflation targeting on economic growth in comparison with its main alternative, exchange rate targeting. Our study, which covers more than 100 countries for the 35 years from 1974 to 2009, presents robust evidence that inflation targeting promotes economic growth.

JEL-codes: E42 E52 E58 F43 (search for similar items in EconPapers)
Date: 2019
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