Inflation targeting in low‐income countries: Does IT work?

Morozumi, Atsuyoshi; Bleaney, Michael; Mumuni, Zakari

Abstract

Previous research on inflation targeting (IT) has focused on high‐income countries and emerging market economies (EMEs). Only recently have sufficient data accumulated for the performance of IT in low‐income countries (LICs) to be assessed. We show that IT has not so far been as effective in reducing inflation in LICs as in EMEs. Relatively low central banks’ instrument independence in LICs, associated with weak restrictions limiting a central bank’s lending to the government, helps explain this result.

Citation

Morozumi, A., Bleaney, M., & Mumuni, Z. (2020). Inflation targeting in low‐income countries: Does IT work?. Review of Development Economics, 24(4), 1529-1550. https://doi.org/10.1111/rode.12690

• Journal Article Type: Article
• Acceptance Date: May 20, 2020
• Online Publication Date: Jul 9, 2020
• Publication Date: Nov 1, 2020
• Deposit Date: Dec 11, 2020
• Publicly Available Date: Dec 11, 2020
• Journal: Review of Development Economics
• Print ISSN: 1363-6669
• Electronic ISSN: 1467-9361
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 24
• Issue: 4
• Pages: 1529-1550
• DOI: https://doi.org/10.1111/rode.12690
• Keywords: inflation targeting; instrument independence; low-income countries
• Public URL: https://nottingham-repository.worktribe.com/output/4759483
• Publisher URL: https://onlinelibrary.wiley.com/doi/10.1111/rode.12690
• Additional Information: Morozumi, A., Bleaney, M., & Mumuni, Z. (2020). Inflation targeting in low‐income countries: Does IT work? Review of Development Economics, 24(4), 1529–1550. https://doi.org/10.1111/rode.12690