Right on Target: Exploring the Determinants of Inflation Targeting Adoption

Samarina, Anna; Haan, Jakob de

doi:10.2139/ssrn.1957602

Cited by 7 publications

(6 citation statements)

References 58 publications

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“…The sixth conditioning variable, according to Truman (2003), is the rate of real GDP per capita growth (GDPpc_G). We expect a negative effect for this variable on the probability of the IT adoption (Truman, 2003;Samaryna and De Haan, 2011), knowing that a high rate of real GDP per capita growth can be considered as the result of the macro-economic policies success, which does not necessarily imply an alternative framework of IT. The two other conditioning variables that theoretically affect both IT_FF and B_DEFICIT variables and whose objective is to satisfy the conditional independence assumption, are the total public debt as a percentage of GDP (PUB_DEBT) and the democracy indicator of polity IV (POLITY2).…”

Section: The Conditioning Variablesmentioning

confidence: 99%

Inflation targeting and public deficit in emerging countries: A time varying treatment effect approach

Kadria¹,

Aïssa²

2016

Economic Modelling

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Several studies including Minea, Tapsoba and Villieu (2012) and Lucotte (2012) claim that in emerging countries, the adoption of inflation targeting (IT) monetary policy and its discipline character allow intensifying their efforts to collect tax revenue and/or expenditure rationalization, and allows the reduction of their budget deficits (Kadria and Ben Aissa, 2014). But, the lag in the effect of monetary policy contains vital information for the policy evaluation (Fang and Miller, 2011). Hence, our contribution to the previous literature is then to evaluate the time varying treatment effect of the IT's adoption by emerging countries on their budgetary discipline in terms of reducing or mastering the public deficit. To do this, we used the propensity score matching approach in order to take account of this "lag effect" or from this effect throughout time. Our empirical analysis, conducted on a sample of 41 economies (20 IT and 21 non-IT economies) for the period from 1990 to 2010, shows that the lag in effect of IT on public deficit performance proves to be shorter and gradual for emerging countries that have adopted this monetary policy framework and our conclusions corroborate the literature disciplining effect of IT on fiscal policy.

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Section: The Conditioning Variablesmentioning

confidence: 99%

Inflation targeting and public deficit in emerging countries: A time varying treatment effect approach

Kadria¹,

Aïssa²

2016

Economic Modelling

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“…If legal independence before and after 1989 is the same, we use Arnone's value of the legal index for 1980 also for the period 1970–1980. The data for the adoption of inflation targeting is taken from Samaryna and De Haan (), Leyva (), and Roger ().…”

Section: Datamentioning

confidence: 99%

Financial Crises and the Dismissal of Central Bank Governors: New Evidence

Artha

Haan

2014

Int. J Fin Econ

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This paper examines whether financial crises affect the likelihood that a central bank governor will be replaced. Employing a conditional fixed effects logit model for 101 countries during the period 1970–2007, we find that financial crises significantly increase the likelihood of a central bank governor turnover. When we decompose crises into banking, currency, and debt crises we find that banking crises and debt crises significantly increase the likelihood that a central bank governor will be replaced. Our results also suggest that financial crises increase the probability that a non‐government ally will be appointed as new central bank governor. Copyright © 2014 John Wiley & Sons, Ltd.

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“…The sixth conditioning variable, according to Truman (2003) and obtained from WDI, is the rate of real GDP per capita growth (GDPpc_G). We expect a negative effect for this variable on the probability of the IT adoption (Truman, 2003;Samaryna & De Haan, 2011), knowing that a high rate of real GDP per capita growth can be considered as the result of the macro-economic policies success, which does not necessarily imply an alternative framework of IT. The two other conditioning variables that theoretically affect both IT_FF and B_DEFICIT variables and whose objective is to satisfy the conditional independence assumption, are the total public debt as a percentage of GDP (PUB_DEBT) The Clute Institute taken from the new dataset computed by Abbas et al (2010), and the democracy indicator (POLITY2), taking values from -10 (very autocratic) to +10 (very democratic), developed by Polity IV Project.…”

Section: The Conditioning Variablesmentioning

confidence: 99%

Implementation Of Inflation Targeting And Budget Deficit Performance In Emerging Countries: A Treatment Effect Evaluation

Kadria

Aïssa

2014

JABR

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<p>In this paper, we tried to examine whether the implementation of inflation targeting (IT) monetary policy and its discipline character allows reducing the budget deficit in emerging countries. To do this, we used the propensity score matching methodology to evaluate the treatment effect of IT on fiscal discipline, in terms of budget deficit performance, in emerging countries has adopted this monetary policy framework. Our empirical analysis, conducted on a sample of 41 economies (20 IT and 21 non-IT economies) for the period from 1990 to 2010, shows that on average IT adoption has had a considerable and significant effect in reducing the budget deficit. Our results are confirmed by the robustness tests and corroborate the literature of disciplining effects of IT regime on the fiscal discipline.</p>

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Right on Target: Exploring the Determinants of Inflation Targeting Adoption

Cited by 7 publications

References 58 publications

Inflation targeting and public deficit in emerging countries: A time varying treatment effect approach

Inflation targeting and public deficit in emerging countries: A time varying treatment effect approach

Financial Crises and the Dismissal of Central Bank Governors: New Evidence

Implementation Of Inflation Targeting And Budget Deficit Performance In Emerging Countries: A Treatment Effect Evaluation

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