In Search of Successful Inflation Targeting: Evidence From An Inflation Targeting Index

Author/Editor:

Yanliang Miao

Publication Date:

July 1, 2009

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

In a first attempt to treat inflation targeting (IT) as a continuous variable, we construct IT subindices for 21 full-fledged ITers on three dimensions: flexibility, transparency, and explicitness. Comparing flexibility and transparency we find that (1) the impact of flexibility on both the mean and variation of inflation is more quadratic than that of transparency; (2) after adding the transparency index, the impact of flexibility is no longer significant. The significant and negative association between transparency and the level and variation of inflation is confirmed when we check for robustness by controlling for disinflation stage, subsampling, instrumental variable estimation, and principal component analysis (PCA).

Series:

Working Paper No. 2009/148

Subject:

Banking Central bank autonomy Central banks Disinflation Inflation Inflation targeting Institutional arrangements for revenue administration Monetary policy Prices Revenue administration

Frequency:

Annually

English

Publication Date:

July 1, 2009

ISBN/ISSN:

9781451872958/1018-5941

Stock No:

WPIEA2009148

Pages:

35

Please address any questions about this title to publications@imf.org