{ "title": "Inflation Anchoring and Growth: Evidence from Sectoral Data", "publication": "IMF Working Papers, March 2, 2018", "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2018/03/02/inflation-anchoring-and-growth-evidence-from-sectoral-data-45668", "canonical": "https://www.imf.org/en/publications/wp/issues/2018/03/02/inflation-anchoring-and-growth-evidence-from-sectoral-data-45668", "overlayPath": "/en/publications/wp/issues/2018/03/02/inflation-anchoring-and-growth-evidence-from-sectoral-data-45668/index.md", "summary": "Central bankers often assert that low inflation and anchoring of inflation expectations are good for economic growth (Bernanke 2007, Plosser 2007).", "sections": [ { "heading": "Research question and data", "content": "- Objective: Test whether low inflation and anchoring of inflation expectations are good for economic growth.\n- Sample: panel data on sectoral growth for 22 manufacturing industries for 36 advanced and emerging market economies over the period 1990-2014.\n- Measurement of inflation anchoring: the response of inflation expectations to inflation surprises (Levin et al., 2004)." }, { "heading": "Key empirical findings", "content": "- Credit constrained industries—those characterized by high external financial dependence and R&D intensity and low asset tangibility—tend to grow faster in countries with well-anchored inflation expectations.\n- The positive effect on growth is associated with inflation anchoring rather than the level of inflation per se.\n- Results are robust to controlling for interactions between industry characteristics and a broad set of macroeconomic variables over the sample period, including:\n - financial development\n - inflation\n - the size of government\n - overall economic growth\n - monetary policy counter-cyclicality\n - the level of inflation\n- Results are robust to IV techniques, using as instruments indicators of monetary policy transparency and independence." }, { "heading": "Policy implications and interpretation", "content": "- Strengthening the anchoring of inflation expectations can disproportionately benefit credit constrained industries (high external financial dependence; high R&D intensity; low asset tangibility) and thereby support sectoral growth.\n- Policy emphasis on monetary policy credibility, transparency, and institutional independence may improve growth outcomes via better-anchored inflation expectations.\n- Consideration of industry heterogeneity is important when assessing the growth benefits of inflation-anchoring policies." }, { "heading": "Publication and metadata", "content": "- Authors: Sangyup Choi, Davide Furceri, Prakash Loungani\n- Date: March 2, 2018\n- Pages: 38\n- Volume: 2018\n- Issue: 036\n- Series: Working Paper No. 2018/036\n- DOI: https://doi.org/10.5089/9781484344200.001\n- Stock No: WPIEA2018036\n- ISBN: 9781484344200\n- ISSN: 1018-5941\n- Subjects: Credit, Economic sectors, Financial services, Inflation, Manufacturing, Money, Prices, Real interest rates, Short term interest rates\n- Keywords: Credit, credit constraints, effect of inflation, expectation data, Global, industry-level data, Inflation, inflation anchoring, inflation expectation, inflation shock, inflation surprise, inflation variable, inflation volatility, low-inflation environment, Manufacturing, medium-term growth, Real interest rates, Short term interest rates, WP\n\nSource: IMF Working Papers — \"Inflation Anchoring and Growth: Evidence from Sectoral Data\" by Sangyup Choi, Davide Furceri, Prakash Loungani (March 2, 2018).\n\n---\n\n Content in this bundle\n\n- Inflation Anchoring and Growth: Evidence from Sectoral Data, WP/18/36, March 2018\n - Inflation Anchoring and Growth: Evidence from Sectoral Data, WP/18/36, March 2018 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Inflation Anchoring and Growth: Evidence from Sectoral Data, WP/18/36, March 2018 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2018/03/02/inflation-anchoring-and-growth-evidence-from-sectoral-data-45668" } ], "bullets": [ "[Markdown version](/en/publications/wp/issues/2018/03/02/inflation-anchoring-and-growth-evidence-from-sectoral-data-45668/index.md)", "[Structured JSON version](/en/publications/wp/issues/2018/03/02/inflation-anchoring-and-growth-evidence-from-sectoral-data-45668/index.json)", "[Bundle manifest](/en/publications/wp/issues/2018/03/02/inflation-anchoring-and-growth-evidence-from-sectoral-data-45668/bundle-manifest.json)", "Authors: Sangyup Choi, Davide Furceri, Prakash Loungani", "Published: March 2, 2018", "Series: IMF Working Papers", "DOI: https://doi.org/10.5089/9781484344200.001", "Objective: Test whether low inflation and anchoring of inflation expectations are good for economic growth.", "Sample: panel data on sectoral growth for 22 manufacturing industries for 36 advanced and emerging market economies over the period 1990-2014.", "Measurement of inflation anchoring: the response of inflation expectations to inflation surprises (Levin et al., 2004).", "Credit constrained industries—those characterized by high external financial dependence and R&D intensity and low asset tangibility—tend to grow faster in countries with well-anchored inflation expectations.", "The positive effect on growth is associated with inflation anchoring rather than the level of inflation per se.", "Results are robust to controlling for interactions between industry characteristics and a broad set of macroeconomic variables over the sample period, including:", "Results are robust to IV techniques, using as instruments indicators of monetary policy transparency and independence.", "Strengthening the anchoring of inflation expectations can disproportionately benefit credit constrained industries (high external financial dependence; high R&D intensity; low asset tangibility) and thereby support sectoral growth.", "Policy emphasis on monetary policy credibility, transparency, and institutional independence may improve growth outcomes via better-anchored inflation expectations.", "Consideration of industry heterogeneity is important when assessing the growth benefits of inflation-anchoring policies.", "Authors: Sangyup Choi, Davide Furceri, Prakash Loungani", "Date: March 2, 2018", "Pages: 38", "Volume: 2018", "Issue: 036", "Series: Working Paper No. 2018/036", "DOI: https://doi.org/10.5089/9781484344200.001", "Stock No: WPIEA2018036", "ISBN: 9781484344200", "ISSN: 1018-5941", "Subjects: Credit, Economic sectors, Financial services, Inflation, Manufacturing, Money, Prices, Real interest rates, Short term interest rates", "Keywords: Credit, credit constraints, effect of inflation, expectation data, Global, industry-level data, Inflation, inflation anchoring, inflation expectation, inflation shock, inflation surprise, inflation variable, inflation volatility, low-inflation environment, Manufacturing, medium-term growth, Real interest rates, Short term interest rates, WP", "**Inflation Anchoring and Growth: Evidence from Sectoral Data, WP/18/36, March 2018**" ], "related": [ { "title": "Inflation Anchoring and Growth: Evidence from Sectoral Data, WP/18/36, March 2018", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/wp/2018/wp1836.pdf", "summary": { "path": "/-/media/files/publications/wp/2018/wp1836.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/wp/2018/wp1836.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/publications/wp/issues/2018/03/02/inflation-anchoring-and-growth-evidence-from-sectoral-data-45668/index.md", "json": "/en/publications/wp/issues/2018/03/02/inflation-anchoring-and-growth-evidence-from-sectoral-data-45668/index.json", "bundleManifest": "/en/publications/wp/issues/2018/03/02/inflation-anchoring-and-growth-evidence-from-sectoral-data-45668/bundle-manifest.json" }, "generatedAtUtc": "2026-09-18T13:00:06.134Z" }