Monetary policy regimes and growth revisited: evidence from a de facto classification

Kin-Ming Wong, Terence Tai-Leung Chong*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

Pioneered by New Zealand in 1990, a growing number of countries have adopted the practice of inflation targeting, the international experience of which has been reported as satisfactory. However, existing empirical evidence fails to support inflation targeting as having a positive growth effect. To provide further evidence, this study adopts a new classification system for monetary policy regimes that allows the empirical estimation of the effect of inflation targeting on economic growth in comparison with its main alternative, exchange rate targeting. Our study, which covers more than 100 countries for the 35 years from 1974 to 2009, presents robust evidence that inflation targeting promotes economic growth.
Original languageEnglish
Pages (from-to)908–929
Number of pages22
JournalOxford Economic Papers
Volume71
Issue number4
DOIs
Publication statusPublished - Oct 2019

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