A new test for the success of inflation targeting

Andrew Powell, Martin Gonzalez-Rozada and Verónica Cohen Sabbán

Business School Working Papers from Universidad Torcuato Di Tella

Abstract: We propose a new test, derived from a set of variance decompositions of a structural VAR, for the success of inflation targeting. In contrast to standard sacrifice ratios this test considers changes in the structure of real and nominal shocks; second moment effects. We find strong support for IT with 7 of the 9 countries in our sample having negative “sacrifices” and many countries with “benefits”. However, we also find very different performances across IT countries.

Pages: 34 pages
Date: 2003-01-01
New Economics Papers: this item is included in nep-lam and nep-mon
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Citations: View citations in EconPapers (6)

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Working Paper: A New Test for the Success of Inflation Targeting (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:udt:wpbsdt:trece

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