{
  "title": "Inflation Targeting and Output Growth: Empirical Evidence for the European Union",
  "publication": "IMF Working Papers, May 1, 2005",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/inflation-targeting-and-output-growth-empirical-evidence-for-the-european-union-18189",
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  "summary": "This paper evaluates the performance of two alternative policy rules, a forward-looking rule and a spontaneous adjustment rule, under alternative inflation targets, in terms of output losses in a macroeconomic model, using European Union data.",
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    {
      "heading": "Summary",
      "content": "- Paper evaluates performance of two alternative policy rules: a forward-looking rule and a spontaneous adjustment rule.\n- Evaluation is conducted under alternative inflation targets, measured in terms of output losses in a macroeconomic model, using European Union data.\n- Main simulation findings:\n  - Forward-looking rules contribute to macroeconomic stability and monetary policy credibility.\n  - A positive inflation target, as opposed to zero inflation, leads to higher and less volatile output.\n- Results are robust to changes in the specification of the model and time period.\n- Applying the same methodology to individual countries supports country-specific flexible inflation targeting."
    },
    {
      "heading": "Key findings and implications",
      "content": "- Findings:\n  - Forward-looking monetary policy rules improve macroeconomic stability.\n  - Positive inflation targets outperform zero inflation for output level and volatility.\n  - Country-level application supports flexible, country-specific inflation targeting.\n- Policy implications:\n  - Consider adopting forward-looking monetary policy rules to enhance credibility and stability.\n  - Maintain a positive inflation target rather than aiming for zero inflation to support higher and less volatile output.\n  - Allow flexibility for country-specific inflation-targeting frameworks within the European Union context."
    },
    {
      "heading": "Methodology",
      "content": "- Uses a macroeconomic model to simulate output losses under alternative policy rules and inflation targets.\n- Comparative analysis includes robustness checks across model specifications and time periods.\n- Methodology is also applied to individual countries for country-specific evaluation.\n\n---\n\n Content in this bundle\n\n- Wp0589\n  - Wp0589 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Wp0589 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/inflation-targeting-and-output-growth-empirical-evidence-for-the-european-union-18189"
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    "Published: May 1, 2005",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451861082.001",
    "Paper evaluates performance of two alternative policy rules: a forward-looking rule and a spontaneous adjustment rule.",
    "Evaluation is conducted under alternative inflation targets, measured in terms of output losses in a macroeconomic model, using European Union data.",
    "Main simulation findings:",
    "Results are robust to changes in the specification of the model and time period.",
    "Applying the same methodology to individual countries supports country-specific flexible inflation targeting.",
    "Findings:",
    "Policy implications:",
    "Uses a macroeconomic model to simulate output losses under alternative policy rules and inflation targets.",
    "Comparative analysis includes robustness checks across model specifications and time periods.",
    "Methodology is also applied to individual countries for country-specific evaluation.",
    "**Wp0589**"
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