Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/250291 
Year of Publication: 
2020
Series/Report no.: 
CREDIT Research Paper No. 20/01
Publisher: 
The University of Nottingham, Centre for Research in Economic Development and International Trade (CREDIT), Nottingham
Abstract: 
Previous research on inflation targeting (IT) has focused on high-income countries (HICs) and emerging market economies (EMEs). Only recently has enough data accumulated for the performance of IT in low-income countries (LICs) to be assessed. We show that IT has not so far been as effective in reducing inflation in LICs as in EMEs. Relatively weak institutions, a typical feature of LICs, help explain this result. Our interpretation is that poor institutions, leaving fiscal policy unconstrained, impair central banks' ability to conduct monetary policy in a way consistent with IT.
Subjects: 
Inflation targeting
Low-income countries
Institutions
JEL: 
E52
E58
O23
Document Type: 
Working Paper

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