Has inflation targeting changed the conduct of monetary policy? - Sciences Po Access content directly
Journal Articles Macroeconomic Dynamics Year : 2015

Has inflation targeting changed the conduct of monetary policy?

Abstract

We aim at establishing whether the institutional adoption of inflation targeting has changed the conduct of monetary policy. To do so, we test the hypothesis of inflation targeting translating into a stronger response to inflation in a Taylor rule with three alternative econometric models: a structural break model, a time-varying parameter model with stochastic volatility, and a Markov-switching VAR model. We conclude that inflation targeting has not led to a stronger response to inflation in the reaction function of the monetary authority. This result suggests that inflation targeting being meant to anchor inflation expectations through enhanced credibility and accountability, it may enable a central bank to stabilize inflation without pursuing aggressive action toward inflation variations.
No file

Dates and versions

hal-03411690 , version 1 (02-11-2021)

Identifiers

Cite

Jérôme Creel, Paul Hubert. Has inflation targeting changed the conduct of monetary policy?. Macroeconomic Dynamics, 2015, 19 (01), pp.1 - 21. ⟨10.1017/S1365100513000199⟩. ⟨hal-03411690⟩

Collections

SCIENCESPO OFCE
28 View
0 Download

Altmetric

Share

Gmail Facebook X LinkedIn More