Assessing the Macroeconomic Effects of Inflation Targeting: Evidence from OECD Economies

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Author	Ikram Ben Romdhane, Sami Mensi
ISSN	2307-2466
On Pages	38-45
Volume No.	4
Issue No.	1
Issue Date	February 01, 2020
Publishing Date	February 01, 2020
Keywords	Inflation targeting, Performance, Macroeconomic Dimensions, Monetary Policy, Panel Analysis.

Abstract

With the numerous monetary policy reforms undertaken during the 1990s, inflation targeting emerged as one of the possible solutions. The macroeconomic performance of this regime has attracted the attention of recent research, yet no final consensus on its role is reached. The aim ofthis paper is to contribute to this debate through panoply of mixed results proven by the recent literature. Empirically, the purpose of this study is to assess the impact of inflation targeting on inflation and output based on a panel of 30OECD countries over theperiod1980_2012, using the �differences-in- differences� approach of Ball and Sheridan (2005). Our results indicate that inflation targeting helps to improve macroeconomic performance of targeted OECD countries more than non- marketers in terms of average inflation and volatility. Our findings corroborate previous studies like those of Wu (2004), Ball and Sheridan (2005) and Manai,O (2014). However, our results point to an insignificant impact of this regime on output consistent with Gon�alves- Salles (2008) and Ftiti & Essadi (2013).However, our results contrast those of S-Hebbel (2007) and Ftiti J. Goux (2011) which assume that there is no difference between targeted and non-targeted OECD countries.

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