Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71827
Authors: 
Divino, Jose Angelo
Year of Publication: 
2009
Series/Report no.: 
Working Paper, International Policy Centre for Inclusive Growth 56
Abstract: 
Several countries around the world have adopted the inflation targeting regime for monetary policy. Despite the growing literature on the issue, it is not clear whether developing and emerging countries can improve their economic performance by adopting inflation targeting. This working paper examines the extent to which macroeconomic policies anchored to inflation targeting affect unemployment, economic growth and the output gap. The results show that inflation targeting causes no harm to employment in developing and emerging countries. On the contrary, it might reduce average unemployment and narrow the output gap. Given that the change in regime must be accompanied by institutional and economic reforms to fiscal and exchange rate policies, targeters might be better off than non-targeters. Hence there is no apparent reason to condemn the adoption of the inflation targeting regime by developing and emerging countries.
Subjects: 
Inflation targeting
Unemployment
Economic growth
Output gap
Document Type: 
Working Paper

Files in This Item:
File
Size
260.38 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.