How to order
IMF Publications

Related material:
Transparency at the IMF--A Factsheet

Working Papers in full text
2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 All


Other research-related activities and publications of the IMF can be found at IMF Research

Free Email Notification

Receive emails when we post new items of interest to you.

Subscribe or Modify your profile



Testing the Transparency Benefits of Inflation Targeting: Evidence from Private Sector Forecasts

Author/Editor: Crowe, Christopher W.
Authorized for Distribution: December 1, 2006
Electronic Access: Free Full Text (PDF file size is 650KB)
Use the free Adobe Acrobat Reader to view this PDF file.
 
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: I test whether inflation targeting (IT) enhances transparency using inflation forecast data for 11 IT adoption countries. IT adoption promotes convergence in forecast errors, suggesting that it enhances transparency. This effect is robust to dropping observations, is strengthened by using instrumental variable estimation to eliminate mean-reversion, and is absent in placebo regressions (where IT adoption is shifted by a year). This result supports Morris and Shin's (2002) contention that better public information is most beneficial for forecasters with bad private information. However, it does not support their hypothesis that better public information could make private forecasts less accurate.
 
Order a print copy
Series: Working Paper No. 06/289
Subject(s): Inflation targeting | Inflation | Economic forecasting | Central banks | Transparency | Private sector | Forecasting models | Economic models
Author's keyword(s): Inflation targeting | inflation forecasts | Central Bank transparency | propensity score matching
 
English  
    Published:   December 1, 2006        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA2006289   Pages:   29
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
Please address any questions about this title to publications@imf.org.