{
  "title": "Macro Effects of Formal Adoption of Inflation Targeting",
  "publication": "IMF Working Papers, January 13, 2023",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2023/01/15/macro-effects-of-formal-adoption-of-inflation-targeting-528218",
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  "summary": "We examine the impact of formal adoption of inflation targeting (IT) on inflation, growth and anchoring of inflation expectations in advanced economies and emerging markets and developing economies (EMDEs). Our paper reports several findings relevant to assessing the success of IT regimes.",
  "sections": [
    {
      "heading": "Summary of research question and approach",
      "content": "- Examines the impact of formal adoption of inflation targeting (IT) on inflation, growth, and anchoring of inflation expectations in advanced economies and emerging markets and developing economies (EMDEs).\n- Uses country-level analysis including the Synthetic Control Method (SCM) to compare outcomes in IT countries to a synthetic cohort."
    },
    {
      "heading": "Key findings on inflation",
      "content": "- Early adopters of IT (pre-2000) all saw declines in inflation rates following adoption.\n- IT adopters since pre-2000 have enjoyed declines in inflation in only about half the cases.\n- On average, there is not much difference between IT and non-IT countries in:\n  - mean inflation,\n  - inflation volatility,\n  - the extent of inflation anchoring.\n- Cannot rule out the possibility that observed success of IT may be due to “regression to the mean.”\n- SCM country-level results: IT adoption delivers significant inflation gains in about a third of the cases."
    },
    {
      "heading": "Key findings on growth",
      "content": "- Finds limited support for the concern that adoption of IT systematically leads to poorer growth outcomes."
    },
    {
      "heading": "Interpretation and policy-relevant implication",
      "content": "- The belief that IT adoption will be sufficient to keep inflation in check cannot be taken for granted, especially at a time when central banks are struggling to control inflation."
    },
    {
      "heading": "Publication and metadata (selected)",
      "content": "- Authors: Surjit Bhalla, Karan Bhasin, Prakash Loungani\n- Date: January 13, 2023\n- Pages: 31\n- Volume: 2023\n- Issue: 007\n- Series: Working Paper No. 2023/007\n- DOI: https://doi.org/10.5089/9798400229169.001\n- Stock No: WPIEA2023007\n- ISBN: 9798400229169\n- ISSN: 1018-5941\n- Subjects / Keywords: Emerging and frontier financial markets, Financial markets, Inflation, Inflation targeting, Monetary policy, Prices; Emerging and frontier financial markets, Global, Inflation, inflation expectation, Inflation expectations, Inflation forecasts, Inflation targeting, inflation volatility, IT adopter, IT adoption, IT country\n\nIMF Working Papers — Macro Effects of Formal Adoption of Inflation Targeting (Working Paper No. 2023/007, January 13, 2023).\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2023/01/15/macro-effects-of-formal-adoption-of-inflation-targeting-528218"
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    "Authors: Surjit Bhalla, Karan Bhasin, Prakash Loungani",
    "Published: January 13, 2023",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400229169.001",
    "Examines the impact of formal adoption of inflation targeting (IT) on inflation, growth, and anchoring of inflation expectations in advanced economies and emerging markets and developing economies (EMDEs).",
    "Uses country-level analysis including the Synthetic Control Method (SCM) to compare outcomes in IT countries to a synthetic cohort.",
    "Early adopters of IT (pre-2000) all saw declines in inflation rates following adoption.",
    "IT adopters since pre-2000 have enjoyed declines in inflation in only about half the cases.",
    "On average, there is not much difference between IT and non-IT countries in:",
    "Cannot rule out the possibility that observed success of IT may be due to “regression to the mean.”",
    "SCM country-level results: IT adoption delivers significant inflation gains in about a third of the cases.",
    "Finds limited support for the concern that adoption of IT systematically leads to poorer growth outcomes.",
    "The belief that IT adoption will be sufficient to keep inflation in check cannot be taken for granted, especially at a time when central banks are struggling to control inflation.",
    "Authors: Surjit Bhalla, Karan Bhasin, Prakash Loungani",
    "Date: January 13, 2023",
    "Pages: 31",
    "Volume: 2023",
    "Issue: 007",
    "Series: Working Paper No. 2023/007",
    "DOI: https://doi.org/10.5089/9798400229169.001",
    "Stock No: WPIEA2023007",
    "ISBN: 9798400229169",
    "ISSN: 1018-5941",
    "Subjects / Keywords: Emerging and frontier financial markets, Financial markets, Inflation, Inflation targeting, Monetary policy, Prices; Emerging and frontier financial markets, Global, Inflation, inflation expectation, Inflation expectations, Inflation forecasts, Inflation targeting, inflation volatility, IT adopter, IT adoption, IT country",
    "**Working Paper**"
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