| Peer-Reviewed

Economic Performance and Inflation Targeting in Developing Economies

Received: 17 January 2014    Accepted:     Published: 20 February 2014
Views:       Downloads:
Abstract

This paper investigates the effect of inflation targeting (IT) on inflation, output growth and interest rates. Based on panel data of 53 developing countries, of which 20 that have adopted IT by the end of 2007. In this study we use the differences-in-differences approach of Ball and Sheridan (2005) to analyze the relationship between IT and economic performance over the period 1980-2012. The results show that the empirical analysis confirms that the effect of inflation targeting in developing economies will contribute effectively to achieve economic performance.

Published in Journal of World Economic Research (Volume 3, Issue 1)
DOI 10.11648/j.jwer.20140301.11
Page(s) 1-7
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Inflation Targeting, Developing Economies, Economic Performance

References
[1] Alberto and al. (2002). Inflation Targeting in Emerging Market Countries, Too Much Exchange Rate Intervention? A Test Goldman Sachs Economic Research.
[2] Al-Nasser, O. M., Sachsida, A. and Mário, M. (2009). The Openness Inflation Puzzle: Panel Data Evidence. International Research Journal of Finance and Economics, 28, 169–181.
[3] Armand, F. A. and S, Roger. (2013). Inflation Targeting and Country Risk: an Empirical Investigation. IMF/WP/13/21.
[4] Amato, J.D. and Gerlach, S. (2002). Inflation Targeting in Emerging Market and Transition Economies: Lessons after a decade. European Economic Review, 46(4-5), 781–790.
[5] Arminio, F. Ilan, G. and Andre, M. (2003). Inflation Targeting in Emerging Market. NBER, WP/ 10019.
[6] Ball, L. and N. Sheridan. (2005). Does Inflation Targeting Matter?, In The Inflation Targeting Debate, edited by B. S. Bernanke and M. Woodford, 249-76. University of Chicago Press for the NBER.
[7] Batini, N., and D. Laxton. (2007). Under What Conditions Can Inflation Targeting be Adopted?, in F. S. Mishkin and K. Schmidt-Hebbel (eds), Monetary Policy Under Inflation Targeting, Santiago, Banco Central de Chile: Santiago, 467–506.
[8] Ben Aissa M.S., Boutahar M., and Jouini J. (2004). The Bai and Perron’s and Spectral Density Methods for Structural Change Detection in the US Inflation Process, Applied Economics Letters, 11, 2, pp. 109-115.
[9] Bernanke, B., and F. S. Mishkin. (1997). Inflation Targeting: A New Framework for Monetary Policy, Journal of Economic Perspectives, 11(2), 97-116.
[10] Bernanke, S., Laubach, T., Mishkin, F. and Posen, A.S. (1999). Inflation Targeting: Lessons from The International experience (Princeton University Press).
[11] Brito, R.D. and Bystedt, B. (2010). Inflation Targeting in emerging economies: Panel evidence. Journal of Development Economics, 91(2), 198–210.
[12] Cecchetti, S. and Ehrmann, M. (2000). Does Inflation Targeting Increase Output Volatility? An International Comparison of Policy Maker’s Preferences and Outcomes. Central Bank of Chile, 69.
[13] Corbo, C.,C. Landarretche, M. and K. Schmidt-Hebbel. (2002). Does Inflation Targeting Make a Difference?, in N. Loayza and R. Soto (eds), Inflation Targeting: Design, Performance, Challenges, Central Bank of Chile: Santiago, 221–69.
[14] Da Silva M.E.A, Portugal M. (2002). Inflation Targeting in Brazil: An empirical Evaluation, Revista de Economia, 9, 2, pp. 85-122.
[15] Divino, J. A. (2009). The Impact of Inflation Targeting on Unemployment in Developing and Emerging Markets. International Policy Centre for Inclusive Growth, WP. 56.
[16] Fischer, S. (1993). The Role of Macroeconomic Factors in Growth. Journal of Monetary Economics, 32, 5, 455-511.
[17] Ftiti.Z and Essadi. E (2013). Relevance of the Inflation Targeting Policy. Journal of Economic and Financial Modelling. Vol.1 No.1, pp. 62-72.
[18] Kim, M. and Beladi, H. (2009). Is Free Trade Deflationary?. Economics Letters, 89(3), pp. 343–349.
[19] Genc I.H., Lee M., Rodriguez C.O., Lutz S. (2007). Time Series Analysis on Inflation Targeting in Selected Countries. Journal of Economic Policy Reform, 10, 1,15-27.
[20] Gonçalves, C.E.S., Salles, J.M. (2008). Inflation Targeting in Emerging Economies: What do the Data Say? Journal of Development Economics, 85(1-2), 312–318.
[21] Hove, S. (2010). Do Institutional Structures Really Matter for Inflation Targeting in Emerging Market Economies?. School of Economics, University of Cape Town WP.
[22] Hyvonen, M. (2004). Inflation Convergence Across Countries. Discussion Paper 2004-04. Sydney: Reserve Bank of Australia.
[23] Leiderman, L. and Svensson, Lars E.O. (1995). Inflation Targets. London: Centre for Economic Policy Research.
[24] Levin, A. T., F. M. Natalucci and J. M. Piger. (2004). The Macroeconomic Effects of Inflation Targeting. Federal Reserve Bank of St. Louis Review, 86(4), 51–80.
[25] Lin, S. (2010). On the International Effects of Inflation Targeting. The Review of Economics and Statistics, 92(1), 195-99.
[26] Lin, S. and Ye, H. (2009). Does Inflation Targeting Make a Difference in Developing Countries?. Journal of Development Economics, 89(1), 118–123.
[27] Manai, O. Chebbi, A. and Madouri, A. (2013). Inflation Targeting Policy: Pre-Requisites and Opportunities for Tunisia. Science Journal of Economics. Doi 10.7237/Sje/234. Vol 2013.
[28] Mishkin, F.S. (1999). International Experiences with Different Monetary Policy Regimes. Journal of Monetary Economics, 43, 3, 579-606.
[29] Mishkin, F.S. (2000). Inflation Targeting in Emerging Market Countries. American Economic Review, 90 (2), 105–109.
[30] Mishkin, F. S. (2004). Can Inflation Targeting Work in Emerging Market Countries?. NBER, WP.10646.
[31] Mishkin, F. (2007). Monetary Policy Under Inflation Targeting: An Introduction. WP, Central Bank of Chile, 396.
[32] Mishkin, F.S., Schmidt-Hebbel, K. (2007). Does Inflation Targeting Make a Difference?. NBER. WP.12876.
[33] Mollick, V., Torres, R. and Carneiro, F. (2008). Does Inflation Targeting Matter for Output Growth?. Evidence from Industrial and Emerging Economies. World Bank WP. 4791.
[34] Pétursson, T. (2004. The Effects of Inflation Targeting on Macroeconomic Performance. Central Bank of Iceland, WP. 23.
[35] Pétursson, T. (2009). Inflation Control Qround the World: Why are some Countries More Successful than Others?. Central Bank of Iceland.
[36] Rose, A. K. (2007). A Stable International Monetary System Emerges: Bretton Woods, Reversed. Journal of International Money and Finance, 26(5), 663–81.
[37] Roger, S. (2009). Inflation Targeting at 20: Achievements and Challenges. IMF WP/09/236. Schmidt-Hebbel, K. and
[38] Sachsida, A., Carneiro, F. and Loureiro, Paulo R. A. (2003). Does Greater Trade Openness Reduce Inflation?. Further Evidence Using Panel Data Techniques. Economics Letters, 81, pp. 315–319.
[39] Svensson, L.E.O. (1997). Inflation Targeting in an Open Economy: Strict or Flexible Inflation Targeting ?. European Economic Review, 41, p. 111 ˝ U1146.
[40] Truman, E.M.. (2003). Inflation Targeting in the World Economy. Institute for International Economics, Washington DC.
[41] Vega, M., Winkelried, D. (2005). Inflation Targeting and Inflation Behavior: A Successful Story?. International Journal of Central Banking, 1(3), 153-175.
[42] Wu, T. (2004). Does Inflation Targeting Reduce Inflation?. An Analysis for the OECD Industrial Countries, Banco Central do Brazil, WP. 83.
Cite This Article
  • APA Style

    Olfa Manai Daboussi. (2014). Economic Performance and Inflation Targeting in Developing Economies. Journal of World Economic Research, 3(1), 1-7. https://doi.org/10.11648/j.jwer.20140301.11

    Copy | Download

    ACS Style

    Olfa Manai Daboussi. Economic Performance and Inflation Targeting in Developing Economies. J. World Econ. Res. 2014, 3(1), 1-7. doi: 10.11648/j.jwer.20140301.11

    Copy | Download

    AMA Style

    Olfa Manai Daboussi. Economic Performance and Inflation Targeting in Developing Economies. J World Econ Res. 2014;3(1):1-7. doi: 10.11648/j.jwer.20140301.11

    Copy | Download

  • @article{10.11648/j.jwer.20140301.11,
      author = {Olfa Manai Daboussi},
      title = {Economic Performance and Inflation Targeting in Developing Economies},
      journal = {Journal of World Economic Research},
      volume = {3},
      number = {1},
      pages = {1-7},
      doi = {10.11648/j.jwer.20140301.11},
      url = {https://doi.org/10.11648/j.jwer.20140301.11},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20140301.11},
      abstract = {This paper investigates the effect of inflation targeting (IT) on inflation, output growth and interest rates. Based on panel data of 53 developing countries, of which 20 that have adopted IT by the end of 2007. In this study we use the differences-in-differences approach of Ball and Sheridan (2005) to analyze the relationship between IT and economic performance over the period 1980-2012. The results show that the empirical analysis confirms that the effect of inflation targeting in developing economies will contribute effectively to achieve economic performance.},
     year = {2014}
    }
    

    Copy | Download

  • TY  - JOUR
    T1  - Economic Performance and Inflation Targeting in Developing Economies
    AU  - Olfa Manai Daboussi
    Y1  - 2014/02/20
    PY  - 2014
    N1  - https://doi.org/10.11648/j.jwer.20140301.11
    DO  - 10.11648/j.jwer.20140301.11
    T2  - Journal of World Economic Research
    JF  - Journal of World Economic Research
    JO  - Journal of World Economic Research
    SP  - 1
    EP  - 7
    PB  - Science Publishing Group
    SN  - 2328-7748
    UR  - https://doi.org/10.11648/j.jwer.20140301.11
    AB  - This paper investigates the effect of inflation targeting (IT) on inflation, output growth and interest rates. Based on panel data of 53 developing countries, of which 20 that have adopted IT by the end of 2007. In this study we use the differences-in-differences approach of Ball and Sheridan (2005) to analyze the relationship between IT and economic performance over the period 1980-2012. The results show that the empirical analysis confirms that the effect of inflation targeting in developing economies will contribute effectively to achieve economic performance.
    VL  - 3
    IS  - 1
    ER  - 

    Copy | Download

Author Information
  • Higher Institute of Management, University of Tunis, Tunis

  • Sections