Inflation targeting in emerging economies: What do the data say?

Gonçalves, Carlos Eduardo Soares; Salles, João M.

doi:10.1016/j.jdeveco.2006.07.002

Cited by 337 publications

(238 citation statements)

References 5 publications

(7 reference statements)

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“…Mishkin and Schmidt-Hebbel (2007) present evidence that the adoption of inflation targeting may reduce an indicator of the combined volatility of output and inflation, but this does not imply that inflation targeting improves average growth performance. Gonçalves and Salles (2008) also present evidence that inflation-targeting countries have lower growth volatility relative to a selected group of non-targeters, but the sample is small (36 observations), the results will be sensitive to large outliers, and there is no clear justification for the selection of countries included in the non-targeting control group. movements and may make errors in allocating resources in response to changing prices.…”

Section: Inflation Targeting: An Overview Of Key Issuesmentioning

confidence: 82%

“…There is some evidence that countries that have adopted inflation targeting have experienced reductions in inflation, lower volatility of inflation, and a reduced degree of exchange rate pass-through (Gonçalves and Salles, 2008;Mishkin and Schmidt-Hebbel, 2007;IMF, 2005). However, these results are sensitive to the controls used to ascertain the impact of inflation targeting and are strongest when inflation-targeting countries are compared to their own pretargeting experience (Mishkin and Schmidt-Hebbel, 2007).…”

Section: Inflation Targeting: An Overview Of Key Issuesmentioning

confidence: 99%

“…Ball and Sheridan (2005) present evidence suggesting that there is no evidence that inflation targeting raises economic growth. While inflation targeters may experience lower inflation, including inflationary responses to shocks (e.g., Mishkin and Schmidt-Hebbel, 2007;IMF, 2005;Gonçalves and Salles, 2008), the impact on the long-run performance of the real economy remains unclear. Mishkin and Schmidt-Hebbel (2007) present evidence that the adoption of inflation targeting may reduce an indicator of the combined volatility of output and inflation, but this does not imply that inflation targeting improves average growth performance.…”

Section: Inflation Targeting: An Overview Of Key Issuesmentioning

confidence: 99%

See 2 more Smart Citations

Is There a Case for Formal Inflation Targeting in Sub-Saharan Africa?

Heintz¹,

Ndikumana²

2011

Journal of African Economies

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This paper examines the question of whether inflation targeting monetary policy is an appropriate framework for sub-Saharan African countries. The paper presents an overview of inflation targeting, reviews the justification for the regime, and summarizes some major critiques. Monetary policy responses to inflation depend on the source of inflationary pressures. Therefore, the determinants of inflation in African countries are investigated, using dynamic panel data, and the implications for inflation targeting are discussed. These issues are examined in greater detail for the two African countries which have formally adopted inflation targeting, South Africa and Ghana. The analysis is placed in the context of the global economic crisis. The paper concludes with a discussion of alternative approaches to monetary policies and the institutional constraints that would need to be addressed to allow central banks to play a stronger developmental role in sub-Saharan African countries.

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Section: Inflation Targeting: An Overview Of Key Issuesmentioning

confidence: 82%

Section: Inflation Targeting: An Overview Of Key Issuesmentioning

confidence: 99%

Section: Inflation Targeting: An Overview Of Key Issuesmentioning

confidence: 99%

See 1 more Smart Citation

Is There a Case for Formal Inflation Targeting in Sub-Saharan Africa?

Heintz¹,

Ndikumana²

2011

Journal of African Economies

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“…Aizenman et al, 2011;Gonçalves and Salles, 2008). In fact, Gonçalves and Salles (2008) find that in a sample of 36 emerging market economies (13 of which implemented IT), the IT adopters experienced a greater decline in inflation and growth volatility compared to the non-adopters.…”

Section: Introductionmentioning

confidence: 97%

“…Many studies subsequently applied and developed this class of policy rules to examine the behavior of central banks in industrialized countries (e.g., Clarida et al, 2000), and several have been applied to emerging and developing economies (e.g. Aizenman et al, 2011;Gonçalves and Salles, 2008). In fact, Gonçalves and Salles (2008) find that in a sample of 36 emerging market economies (13 of which implemented IT), the IT adopters experienced a greater decline in inflation and growth volatility compared to the non-adopters.…”

Section: Introductionmentioning

confidence: 99%

Dove or Hawk? Characterizing monetary policy regime switches in India

Hutchison

Sengupta

Singh

2013

Emerging Markets Review

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The past two decades have witnessed a worldwide move by emerging markets to adopt explicit or implicit inflation targeting regimes. A notable and often discussed exception to this trend, of course, is China which follows a pegged exchange rate regime supported by capital controls. Another major exception is India. It is not clear how to characterize the monetary regime or identify the nominal monetary anchor in India. Is central bank policy in India following a predictable rule that is heavily influenced by a quasi inflation target? And how has the monetary regime been affected by the gradual process of financial liberalization in India? To address these points, we investigate monetary policy regime change in India using a Markov switching model to estimate a time-varying Taylor-type rule for the Reserve Bank of India. We find that the conduct of monetary policy over the last two decades can be characterized by two regimes, which we term 'Hawk' and 'Dove.' In the first of these two regimes, the central bank reveals a greater relative (though not absolute) weight on controlling inflation vis-à-vis narrowing the output gap. The central bank however was found to be in the "Dove" regime about half of our sample period, focusing more on the output gap and exchange rate targets to stimulate exports, rather than moderating inflation. India thus seems to be following its own direction in the conduct of monetary policy, seemingly not overly influenced by the emphasis on quasi-inflation targeting seen in many emerging markets.

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Determinants of financial stress in emerging market economies: Are spatial effects important?

Kösedağlı

Önder

2020

Int. J Fin Econ

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This study aims to analyse the determinants of financial stress and to show the impact of the spatial linkages between 13 emerging economies during 1996–2016. The 2007 Global Financial Crisis has once again showed that financial/economic turmoil of countries has negative effects on other economies. At this point, this study brings novelty to the existing literature by considering the effects of neighbour countries' macroeconomic variables on domestic financial stress and by focusing on financial stress interaction between emerging economies using spatial econometric methods. According to the estimation results, we find current account balance/GDP, economic growth, geopolitical risk and global risk are the most important determinants of financial stress. It is also observed that there is a strong interaction of financial stress among emerging market economies. While geographical linkage is the most important transmission channel of financial stress among those economies, financial and trade linkages also play an important role.

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Inflation targeting in emerging economies: What do the data say?

Cited by 337 publications

References 5 publications

Is There a Case for Formal Inflation Targeting in Sub-Saharan Africa?

Is There a Case for Formal Inflation Targeting in Sub-Saharan Africa?

Dove or Hawk? Characterizing monetary policy regime switches in India

Determinants of financial stress in emerging market economies: Are spatial effects important?

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