Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/297960 
Year of Publication: 
2023
Citation: 
[Journal:] Central Bank Review (CBR) [ISSN:] 1303-0701 [Volume:] 23 [Issue:] 2 [Article No.:] 100118 [Year:] 2023 [Pages:] 1-13
Publisher: 
Elsevier, Amsterdam
Abstract: 
We construct an empirical test of whether the anticipation of adoption of inflation targeting affects the inflation rate. We observe that most of the central banks adopt the regime after first achieving significant disinflation. With pre-inflation-targeting-disinflation, initial targets are met with success and the new regime gains credibility. Working with data for 114 emerging market, advanced and low-income economies, we identify the effect using forward-looking dynamic panel data models in a difference-in-difference framework. We find that inflation targeting is successful in locking-in already low inflation rather than reducing high inflation. The analysis has important implications for central banks looking forward to adoption of inflation targeting.
Subjects: 
Anticipation effect
Central banks
Inflation targeting
JEL: 
E52
E58
E31
C22
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article

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