Inflation Targeting and the Crisis: An Empirical Assessment

February 1, 2010

Preview Citation

Format: Chicago

Irineu E de Carvalho Filho. Inflation Targeting and the Crisis: An Empirical Assessment, (USA: International Monetary Fund, 2010) accessed December 21, 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 appraises how countries with inflation targeting fared during the current crisis, with the goal of establishing the stylized facts that will guide and motivate future research. We find that since August 2008, IT countries lowered nominal policy rates by more and this loosening translated into an even larger differential in real interest rates relative to other countries; were less likely to face deflation scares; and saw sharp real depreciations not associated with a greater perception of risk by markets. We also find some weak evidence that IT countries did better on unemployment rates and advanced IT countries have had relatively stronger industrial production performance. Finally, we find that advanced IT countries had higher GDP growth rates than their non-IT peers, but find no such difference for emerging countries or the full sample.

Subject: Central bank policy rate, Emerging and frontier financial markets, Inflation, Inflation targeting, Real interest rates

Keywords: IT, IT country, Monetary policy, WP

Publication Details

Pages:

22
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2010/045
Stock No:

WPIEA2010045
ISBN:

9781451963045
ISSN:

1018-5941

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