Business cycle synchronization: is it affected by inflation targeting credibility?

SERIEs: Journal of the Spanish Economic Association

Iván Araya¹  Carlos Delgado²  Gabriel Pino³ 

[1] Departamento de Economía, Universidad de Concepción;Escuela de Administración y Negocios, Universidad de Concepción;Escuela de Ingeniería Comercial, Facultad de Economía y Negocios, Universidad de Talca;

关键词: Business cycle synchronization;    Credibility;    Globalization;    Inflation targeting;    Panel VAR;   

DOI  :  10.1007/s13209-019-00206-z

来源: DOAJ

【 摘 要 】

Abstract We empirically study the impact of inflation targeting credibility on business cycle synchronization with G-7 economies. To do this, we use a sample of 15 inflation targeting countries to develop and calculate a reputation-based credibility measure for long- and short-term memory. By using dynamic multipliers through a panel vector autoregressive model, our main findings indicate that greater credibility allows for greater anchoring of inflation expectations by economic agents. This would lead to a greater effectiveness of monetary policy in stabilizing the evolution of prices, allowing the output gap to be more sensitive to external aggregate demand shocks. Therefore, countries with inflation targeting regimes must develop and maintain credibility for their monetary policy if they want to encourage greater interactions with the rest of the world.

【 授权许可】

Unknown