Inflation targeting and the cyclicality of monetary policy

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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.
Original languageEnglish
Pages (from-to)296-302
JournalFinance Research Letters
Early online date28 Oct 2016
Publication statusPublished - Feb 2017

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