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An Investigation of Output Variance Before and During Inflation Targeting

Author

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  • Mr. Francisco d Nadal De Simone

Abstract

Since Taylor estimated a trade-off between inflation and output variance, it has been widely accepted that efforts to keep the inflation rate “too low and stable” will likely result in relatively larger output fluctuations. Following the generalized reduction in inflation variance in the 1990s, that concern was rekindled. This study estimates whether conditional output variance has changed in a sample of 12 countries. With the possible exception of Canada, there is no evidence of an increase in output variance. Either output variance has not changed (i.e., in Korea and Singapore) or has fallen (i.e., in Australia and New Zealand).

Suggested Citation

  • Mr. Francisco d Nadal De Simone, 2001. "An Investigation of Output Variance Before and During Inflation Targeting," IMF Working Papers 2001/215, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2001/215
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    Citations

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    Cited by:

    1. Robert Buckle & David Haugh & Peter Thomson, 2003. "Calm after the storm? Supply-side contributions to New Zealand's GDP volatility decline," New Zealand Economic Papers, Taylor & Francis Journals, vol. 37(2), pages 217-243.
    2. Ivrendi, Mehmet & Guloglu, Bulent, 2010. "Monetary shocks, exchange rates and trade balances: Evidence from inflation targeting countries," Economic Modelling, Elsevier, vol. 27(5), pages 1144-1155, September.
    3. Petrevski, Goran, 2023. "Macroeconomic Effects of Inflation Targeting: A Survey of the Empirical Literature," EconStor Preprints 271122, ZBW - Leibniz Information Centre for Economics.
    4. Mr. Jarkko Soikkeli, 2002. "The Inflation Targeting Framework in Norway," IMF Working Papers 2002/184, International Monetary Fund.
    5. Grand Nathalie & Dropsy Vincent, 2005. "Exchange Rate And Inflation Targeting In Morocco And Tunisia," Macroeconomics 0507018, University Library of Munich, Germany.
    6. Marjan Petreski, 2012. "Output Volatility and Exchange Rate Considerations Under Inflation Targeting : A Review," International Journal of Economics and Financial Issues, Econjournals, vol. 2(4), pages 528-537.
    7. Mr. Scott Roger & Mr. Mark R. Stone, 2005. "On Target? the International Experience with Achieving Inflation Targets," IMF Working Papers 2005/163, International Monetary Fund.
    8. Viktor Kotlán & David Navrátil, 2003. "Inflation Targeting as a Stabilization Tool: Its Design and Performance in the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 53(5-6), pages 220-242, May.
    9. Yifan Hu, 2003. "Empirical Investigations of Inflation Targeting," Working Paper Series WP03-6, Peterson Institute for International Economics.
    10. Marjan Petreski, 2009. "A Critique On Inflation Targeting," Journal Articles, Center For Economic Analyses, pages 11-24, December.

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