Price Stability and Inflation Targeting in Commodity Economies: Macroeconomics versus a Political Economy?

Viktor Koziuk ()
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Viktor Koziuk: Ternopil National Economic University

Visnyk of the National Bank of Ukraine, 2018, issue 244, 4-24

Abstract: In this study, the author argues that maintaining price stability in commodity economies is influenced by their resource rent distribution, and that economic stability is extremely sensitive to the nature of a political regime. The commodity factor alone is shown not to be an impediment to maintaining price stability and implementing inflation targeting. An empirical analysis based on data from 68 resource-rich countries provides evidence that the link between the timing of the implementation of inflation targeting and resource wealth variables is not skewed towards resource-poor countries. This study finds that among democracies, inflation targeters demonstrate the best price stability parameters, the most flexible exchange rates, more independent central banks, and more diversified economies, while among autocracies, the best parameters are seen in countries that have sovereign wealth funds.

Keywords: Price stability; commodity economies; inflation targeting; political regimes; central bank independence (search for similar items in EconPapers)
JEL-codes: E58 E59 O23 Q33 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ukb:journl:y:2018:i:244:p:4-24

DOI: 10.26531/vnbu2018.244.01

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