Inflation Targeting and Inflation Behavior: A Successful Story?

Marco Vega and Diego Winkelried

Macroeconomics from University Library of Munich, Germany

Abstract: This paper estimates the effects of inflation targeting (IT) adoption over inflation dynamics using a wide control group. We contribute to the current IT evaluation literature by considering the adoption of IT by a country as a treatment, just as in the program evaluation literature. Hence, we perform propensity score matching to determine suitable counterfactuals to the actual inflation targeters. With this approach we find that IT has helped in reducing the level and volatility of inflation in the countries that adopted it. This result is robust to alternative definitions of treatment and control groups. We also find that the e ect of IT in the persistence of inflation is rather weak and not as categorical as the one associated with the mean and volatility of inflation.

Keywords: Inflation Targeting; matching methods (search for similar items in EconPapers)
JEL-codes: E (search for similar items in EconPapers)
Pages: 18 pages
Date: 2005-02-16
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Note: Type of Document - pdf; pages: 18
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (236)

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https://econwpa.ub.uni-muenchen.de/econ-wp/mac/papers/0502/0502026.pdf (application/pdf)

Related works:
Journal Article: Inflation Targeting and Inflation Behavior: A Successful Story? (2005)
Working Paper: Inflation Targeting and Inflation Behavior: A Successful Story? (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:0502026

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