WHAT IMPACT DOES INFLATION TARGETING HAVE ON THE REAL ECONOMY OF DEVELOPING AND EMERGING COUNTRIES?

Jose Angelo Divino

Annals of Financial Economics (AFE), 2018, vol. 13, issue 03, 1-18

Abstract: The inflation targeting (IT) regime has been adopted by several countries around the world. Despite the growing empirical literature, it is not clear whether developing and emerging countries can improve economic performance by adopting IT. We investigate how far macroeconomic policies anchored on IT impact on unemployment, economic growth, and output gap. The results show that IT causes no harm to the real economy of developing and emerging countries. On the contrary, it might reduce average unemployment and output gap. Thus, there is no apparent reason to condemn developing and emerging countries for adopting the IT regime.

Keywords: Inflation targeting; unemployment; economic growth; output gap (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1142/S2010495218500124

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