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2005/5
Inflation Targeting and its Effects on Macroeconomic Performance

by Thórarinn G. Pétursson, Vienna, December 2005

ISBN 3-902109-30-0
 
An increasing number of countries have adopted inflation targeting since New Zealand first adopted this framework in early 1990. Currently there are 21 countries using inflation targeting in every continent of the world. This paper discusses the characteristics of these countries and how the adoption of inflation targeting has affected their economic performance along several dimensions. The main conclusion is that inflation targeting has largely been a success. The new framework has made central banks, which previously lacked credibility, able to change the way they do monetary policy towards what is commonly considered best practice. In many respects they have even been leading in creating a new benchmark for how to formulate monetary policy.
 
Introduction 
Definition of inflation targeting 
The inflation-targeting countries 
Economic effects of inflation targeting
Scepticism on the usefulness of inflation targeting
Conclusions

Additional Info
Keywords: inflation targeting; monetary policy
JEL Codes: E42; E52; E58
ISBN No.: 3-902109-30-0
Authors: Thórarinn G. Pétursson

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