## Inflation Targeting and the Crisis: An Empirical Assessment

_IMF Working Papers, February 1, 2010_

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**Canonical URL:** [Inflation Targeting and the Crisis: An Empirical Assessment](https://www.imf.org/en/publications/wp/issues/2016/12/31/inflation-targeting-and-the-crisis-an-empirical-assessment-23636)

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## Bibliographic details
- Authors: Irineu E de Carvalho Filho
- Published: February 1, 2010
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451963045.001

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### Summary
- Paper appraises how countries with inflation targeting (IT) fared during the current crisis, with the goal of establishing the stylized facts that will guide and motivate future research.
- Main distilled findings:
  - Since August 2008, IT countries lowered nominal policy rates by more and this loosening translated into an even larger differential in real interest rates relative to other countries.
  - IT countries were less likely to face deflation scares.
  - IT countries saw sharp real depreciations not associated with a greater perception of risk by markets.
  - Some weak evidence that IT countries did better on unemployment rates.
  - Advanced IT countries have had relatively stronger industrial production performance.
  - Advanced IT countries had higher GDP growth rates than their non-IT peers; no such difference found for emerging countries or the full sample.

### Key findings and empirical points
- Timeframe reference: since August 2008.
- Monetary policy reaction:
  - IT countries lowered nominal policy rates by more (relative comparison to non-IT peers).
  - Loosening led to a larger differential in real interest rates relative to other countries.
- Inflation and risk outcomes:
  - IT countries were less likely to experience deflation scares.
  - Sharp real depreciations in IT countries occurred without a greater perception of risk by markets.
- Real economy outcomes:
  - Weak evidence of better unemployment-rate performance in IT countries.
  - Advanced IT countries: relatively stronger industrial production performance.
  - Advanced IT countries: higher GDP growth rates than their non-IT peers.
  - No GDP growth difference found for emerging countries or for the full sample.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/inflation-targeting-and-the-crisis-an-empirical-assessment-23636_