The Influence of Inflation Targeting on Economic Growth in the OECD and Developing Countries

Анотація

Inflation targeting (IT) is a monetary policy regime that has been successful in terms of stabilizing both inflation and the real economy. Twenty members of OECD and about 20 developing countries have adopted this monetary regime. This paper aims to evaluate the influence of targeting inflation regime on economic growth in advanced and developing countries. The results showed that IT had no remarkable impact on the GDP per capita growth rate in the five-year post-inflation targeting period. Empirical research revealed that the inflation level has no significant influence on economic growth in the long-run. We observed a positive influence of the IT regime on decreasing volatility of real output in both advanced and developing countries. After full-fledged IT adoption, consumer inflation and its volatility in the OECD and emerging economies decreased steeply. However, the onward inflation trend existed for "non-IT-targeters," too. The study also describes the Ukrainian experience with monetarypolicy strategy. Data showed that IT caused to reduce inflation in Ukraine after its 2014-2015 economic and financial crises.

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