Does Inflation Targeting Matter?

June 1, 2003

Preview Citation

Format: Chicago

Niamh Sheridan, and Laurence M. Ball Does Inflation Targeting Matter?, (USA: International Monetary Fund, 2003) accessed December 3, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper asks whether inflation targeting improves economic performance, as measured by the behavior of inflation, output, and interest rates. We compare 7 OECD countries that adopted inflation targeting in the early 1990s to 13 that did not. After the early 1990s, performance improved along many dimensions for both targeting and nontargeting countries. In some cases, the targeters improved by more. However, these differences are explained by the fact that targeters performed worse than nontargeters before the early 1990s, and there is regression towards the mean. Once one controls for this, there is no evidence that inflation targeting improves performance.

Subject: Corporate income tax, Financial services, Inflation, Inflation targeting, Monetary policy, Prices, Production, Production growth, Short term interest rates, Taxes

Keywords: Corporate income tax, Inflation, Inflation expectation, Inflation persistence, Inflation targeters, Inflation targeting, Inflation targeting country, Inflation Targeting Regime, Inflation-targeting dummy, Inflation-targeting period, OECD inflation forecast, Production growth, Short term interest rates, Trend inflation, Unit inflation shock, WP

Publication Details

Pages:

36
Volume:

---
DOI:

---
Issue:

---
Series:

Working Paper No. 2003/129
Stock No:

WPIEA1292003
ISBN:

9781451855135
ISSN:

1018-5941

FACTSHEETS

RESOURCES

TOPICS

Flagship Publications

Other Publications

IMF reports and publications by country

Regional Offices

All News

See Also

For Journalists

Press Center

RESOURCES

FLAGSHIPS

KEY SERIES

IMF NOTES

IMF Working Papers