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How effective is inflation targeting in emerging market economies?

Author

Listed:
  • Thanaset Chevapatrakul

    (Nottingham University Business School)

  • Juan Paez-Farrell

    (Department of Economics, University of Sheffield)

Abstract

We re-assess the links between inflation targeting and economic performance in a sample of developing countries. We estimate the effects of inflation targeting (IT) using quantile regressions, thus enabling us to consider the whole distribution rather than focusing on the effects at the mean. Our findings indicate that following the implementation of IT, it is the least successful countries – those that have reduced inflation the least – that benefit the most. For the remainder there are no benefits to be had from IT. We also find no evidence that IT affects economic volatility. We provide a small model to account for this evidence.

Suggested Citation

  • Thanaset Chevapatrakul & Juan Paez-Farrell, 2018. "How effective is inflation targeting in emerging market economies?," Working Papers 2018005, The University of Sheffield, Department of Economics.
    • Handle: RePEc:shf:wpaper:2018005
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    File URL: http://www.sheffield.ac.uk/economics/research/serps/articles/2018_005
    File Function: First version, May 2018
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    Quantile regression; inflation targeting; emerging markets; monetary policy;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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