Does Inflation Targeting Matter for Output Growth? Evidence from Industrial and Emerging Economies

Andre Varella Mollick (), Rene Cabral Torres () and Francisco Carneiro
Additional contact information
Andre Varella Mollick: University of Texas - Pan American, Postal: Department of Economics and Finance, University of Texas - Pan American, 1201 W. University Dr., Edinburg, TX 78539-2999, USA
Rene Cabral Torres: Escuela de Graduados en Administracion Publica y Politica Publica, Postal: Escuela de Graduados en Administracion Publica y Política Publica, Tecnologico de Monterrey, Campus Monterrey, Ave. Rufino Tamayo, Garza Garcia, NL, Mexico. CP. 66269

No 4791, Policy Research Working Paper Series from The World Bank

Abstract: This paper examines the effects of inflation targeting on industrial and emerging economies' output growth over the "globalization years" of 1986-2004. Controlling for trade openness and two indicators of financial globalization, the authors find systematic positive and significant effects of inflation targeting on real output growth. In dynamic models, the findings show strong output persistence in industrial economies, in which partial and full inflation targeting regimes have a positive long-run impact on growth. In emerging markets, only full inflation targeting policies have any output effect in the long-run. The results suggest that strict inflation targeting is needed to make the discipline effect of the disinflation process outweigh the output costs of promoting high interest rates to attract capital flows in a global world. These findings are robust to the treatment of endogenous globalization measures.

Keywords: Economic Growth; Globalization; Inflation Targeting; Panel Data Methods (search for similar items in EconPapers)
JEL-codes: F31 F32 F33 F34 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2008-12-01
New Economics Papers: this item is included in nep-cba, nep-fdg and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... ered/PDF/WPS4791.pdf Full text (application/pdf)

Related works:
Journal Article: Does inflation targeting matter for output growth? Evidence from industrial and emerging economies (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:4791

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().