Inflation targeting and the cyclicality of monetary policy

Thornton, John;Vasilakis, Chrysovalantis
(2017) Finance Research Letters — Vol. 20, p. 296-302 (2017)

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  • Thornton, John
    Author
  • Vasilakis, ChrysovalantisUCLouvain
    Author
Abstract
We assess whether the adoption of inflation targeting (IT) frameworks has facilitated countercyclical monetary policies in a sample of 90 industrial and developing economies, 22 of which have adopted IT. Using propensity score matching methods, we show that the average treatment effect of IT has a statistically significant and quantitatively quite large effect in facilitating a more countercyclical monetary policy in IT adopting countries.
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Thornton, J., & Vasilakis, C. (2017). Inflation targeting and the cyclicality of monetary policy. Finance Research Letters, 20, 296-302. https://doi.org/10.1016/j.frl.2016.10.012 (Original work published 2017)