In Search of Successful Inflation Targeting : Evidence From An Inflation Targeting Index / Yanliang Miao.

Format:

Book

Government document

Author/Creator:

Miao, Yanliang.

Contributor:

International Monetary Fund.

Series:

IMF Working Papers; Working Paper ; No. 2009/148

IMF Working Papers

Language:

English

Subjects (All):

Inflation targeting.

Monetary policy.

Physical Description:

35 p. : ill.

Edition:

1st ed.

Place of Publication:

Washington, D.C. : International Monetary Fund, 2009.

Language Note:

English

Summary:

In a first attempt to treat inflation targeting (IT) as a continuous variable, we construct IT subindices for 21 full-fledged ITers on three dimensions: flexibility, transparency, and explicitness. Comparing flexibility and transparency we find that (1) the impact of flexibility on both the mean and variation of inflation is more quadratic than that of transparency; (2) after adding the transparency index, the impact of flexibility is no longer significant. The significant and negative association between transparency and the level and variation of inflation is confirmed when we check for robustness by controlling for disinflation stage, subsampling, instrumental variable estimation, and principal component analysis (PCA).

Contents:

Intro

Contents

I. Introduction

II. Literature Review and the Construction of an IT Index

A. What Constitutes Inflation Targeting?

B. A Framework for Constructing an IT Index

III. Data and Econometric Analysis

A. The Validity of the Subindices on Flexibility and Transparency

B. Does IT Matter? Is There an Optimal Degree of Flexibility or Transparency?

C. A Horse Race Between Different IT Components

IV. Robutsness Checks

A. Principal Component Analysis (PCA)

B. Subsampling

C. Endogeneity

V. Avenues for Future Research and Reflections

A. The Creditbility and Flexibility Trade-off

B. Final Reflections

VI. Appendices

Tables

1. Flexibility of IT and Target Design

2. Formal Procedures for Target Breach and Escape Clauses

3. The Flexibility Index of Full-fledged ITers

4. The Transparency Index of Full-fledget ITers

5. Mean Inflation and Inflation Targeting Indices

6. Inflation Variation and Inflation Targeting Indices

7. Principal Components without Orthogonal Rotation

8. Principal Components and the Level and Variation of Inflation

9. Principal Components with Orthogonal Rotation

10. Correlations between the Rotated Factors and the Underlying Attributes

11. Rotated Principal Components and the Level and Variation of Inflation

12. Mean and Variation of Inflation: Subsampling

13. Mean and Variation of Inflation: Controlling for Disinflation

14. Instrument for Transparency and 2SLS Estimation

Figures

1. Inflation and Tranparency for Selected ITers

2. Inflation and Flexibility for Selected ITers

3. Inflation Variation and Transparency for Selected ITers

4. Inflation Variation and Flexibility for Selected ITers

5. Scree Plot of Eigenvalues after PCA

References.

Notes:

Bibliographic Level Mode of Issuance: Monograph

Includes bibliographical references.

Description based on print version record.

ISBN:

9786612843624

9781462322473

1462322476

9781451872958

145187295X

9781282843622

1282843621

9781451995336

1451995334

OCLC:

680614152