IMF Working Papers

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

By Yanliang Miao

July 1, 2009

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Yanliang Miao. In Search of Successful Inflation Targeting: Evidence From An Inflation Targeting Index, (USA: International Monetary Fund, 2009) accessed September 19, 2024
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).

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

Keywords: Africa, Central bank autonomy, Disinflation, Factor Analysis, Flexibility, Frontier country, Inflation, Inflation dynamics, Inflation expectation, Inflation report, Inflation Targeting, Inflation targeting Index, Inflation targeting index consist, Inflation variation, Institutional arrangements for revenue administration, IT framework, IT index, IT indices, Term IT, Transparency, Treats IT, Website coverage, WP

Publication Details

  • Pages:

    35

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2009/148

  • Stock No:

    WPIEA2009148

  • ISBN:

    9781451872958

  • ISSN:

    1018-5941