This paper examines the effects of inflation targeting on industrial and emerging economies' output growth over the "globalization years" of 1986-2004. Controlling for trade openness and two indicators of financial globalization, the authors find systematic positive and significant effects of inflation targeting on real output growth. In dynamic models, the findings show strong output persistence in industrial economies, in which partial and full inflation targeting regimes have a positive long-run impact on growth. In emerging markets, only full inflation targeting policies have any output effect in the long-run. The results suggest that strict inflation targeting is needed to make the discipline effect of the disinflation process outweigh the output costs of promoting high interest rates to attract capital flows in a global world. These findings are robust to the treatment of endogenous globalization measures.
Detalhes
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Autor
Carneiro,Francisco Galrao, Mollick,Andre Varella, Cabral Torres,Rene
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Data do documento
2008/12/01
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TIpo de documento
Documento de trabalho sobre pesquisa de políticas
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No. do relatório
WPS4791
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Nº do volume
1
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Total Volume(s)
1
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País
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Região
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Data de divulgação
2010/07/01
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Disclosure Status
Disclosed
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Nome do documento
Does inflation targeting matter for output growth ? evidence from industrial and emerging economies
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Palavras-chave
industrial economy;financial globalization;Political Economy;Emerging economies;emerging economy;real per capita income;rate of population growth;high population growth rate;per capita income gain;industrial country;emerging market economy;effect of inflation;output growth;random effects model;dynamic specification;measure of trade;gdp growth rate;inflation targeting;dynamic model;capital account liberalization;nominal income growth;department of economics;effects on income;explanatory variable;capital flow;
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