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Right on Target: Exploring the Determinants of Inflation Targeting Adoption

Hanna Samaryna and Jakob de Haan ()
Authors registered in the RePEc Author Service: Anna Samarina ()

DNB Working Papers from Netherlands Central Bank, Research Department

Abstract: This paper examines which economic, fiscal, external, financial, and institutional characteristics of countries affect the likelihood that they adopt inflation targeting as their monetary policy strategy. We estimate a panel binary response transition model for 60 countries and two subsamples consisting of OECD and non-OECD countries over the period 1985-2008. The findings suggest that past macroeconomic performance of a country, its fiscal discipline, exchange rate arrangements, as well as the structure and development of its financial system have a significant impact on the likelihood to adopt inflation targeting. However, the determinants of inflation targeting differ between OECD and non-OECD countries.

Keywords: inflation targeting; monetary policy strategy (search for similar items in EconPapers)
JEL-codes: E42 E52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Date: 2011-11
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Persistent link: https://EconPapers.repec.org/RePEc:dnb:dnbwpp:321

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