 What Can Low-Income Countries Expect From Adopting Inflation Targeting?Alexandra Born, Sarwat Jahan and Edward Gemayel No 2011/276, IMF Working Papers from International Monetary Fund Abstract: Inflation targeting (IT) is a relatively new monetary policy framework for low-income countries (LICs). The limited number of LICs with an IT framework and the short time that has elapsed since the adoption of this framework explains why there are no previous empirical studies on the performance of IT in LICs. This paper has made a first attempt at filling this gap. It finds that inflation targeting appears to be associated with lower inflation and inflation volatility. At the same time, there is no robust evidence of an adverse impact on output. This may explain the appeal of IT for many LICs, where building credibility of monetary policy is difficult and minimizing output costs of reducing inflation is imperative for social and political reasons. Keywords: WP; IT framework; inflation volatility; IT adoption; IT country; monetary policy; Monetary Policy; Low-Income Countries; inflation targeting dummy; inflation-targeting infrastructure; control group; adoption date; Inflation targeting; Inflation; Emerging and frontier financial markets; Monetary transmission mechanism; Monetary policy frameworks; Global (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2011/276 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC. |
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