Inflation targeting in developing economies revisited

John Thornton

No 15012, Working Papers from Bangor Business School, Prifysgol Bangor University (Cymru / Wales)

Abstract: In a recent paper, Gonalvez and Salles (2008) (G-S) report that developing countries adopting the inflation targeting regime experienced greater drops in inflation and GDP growth volatility than non-inflation targeting developing countries. In this paper, I find that the G-S results do not hold up when their analytical framework is employed in the context of a more rational and larger sample of developing countries that controls for the comparability of monetary regimes as suggested by Ball (2010). In particular, adoption of an IT regime did not help reduce inflation and growth volatility in developing countries compared to the average experience with other monetary regimes and was no more advantageous in these regards than the adoption of a hard or crawling peg exchange rate regime.

Keywords: inflation targeting; monetary regimes; developing economies (search for similar items in EconPapers)
JEL-codes: E4 E5 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2015-07
New Economics Papers: this item is included in nep-cba, nep-fdg, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:bng:wpaper:15012

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