Assessing the performance of the inflation targeting policy

Abstract

The purpose of this paper is to evaluate the effectiveness of the inflation targeting regime. More specifically, it is a monetary policy framework that has emerged in many countries since the early 1990s, with New Zealand being the first country which adopted this policy. An important feature of the efficiency of inflation targeting policy is lower variability. Therefore, I conduct simple hypothesis tests in order to examine if there is a change on inflation mean and variability in 47 developed and developing countries out of which 25 have adopted this policy.