Inflation targeting and fiscal policy volatility: Evidence from developing countries

Ablam Estel Apeti (), Jean-Louis Combes and Alexandru Minea
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Ablam Estel Apeti: LEO - Laboratoire d'Économie d'Orleans [2022-...] - UO - Université d'Orléans - UT - Université de Tours - UCA - Université Clermont Auvergne

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Abstract: This paper studies the effect of inflation targeting (IT) on fiscal policy volatility. Using data for 83 developing countries over 1985-2020, estimations based on impact analysis methods reveal that IT adoption reduces fiscal policy volatility. This result is robust when using a wide set of alternative specifications related to additional control variables, different samples, alternative measures of the main variables, or alternative estimation methods. Consequently, contributing to the ongoing literature on fiscal policy volatility, our results suggest that reforms of the monetary policy management in the form of IT adoption may provide a useful policy for fighting fiscal discretion towards a reduction of fiscal policy volatility.

Keywords: JEL Classification: E52; E58; E62; E63 Inflation targeting fiscal policy volatility impact assessment developing countries; E63 Inflation targeting; fiscal policy volatility; impact assessment; developing countries (search for similar items in EconPapers)
Date: 2023-11
Note: View the original document on HAL open archive server: https://hal.science/hal-04339447v1
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Citations: View citations in EconPapers (4)

Published in Journal of International Money and Finance, 2023, pp.102996. ⟨10.1016/j.jimonfin.2023.102996⟩

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Journal Article: Inflation targeting and fiscal policy volatility: Evidence from developing countries (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04339447

DOI: 10.1016/j.jimonfin.2023.102996

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