Inflation targeting: Genuine effects or publication selection bias?

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Date: Sept. 2020
From: European Economic Review(Vol. 128)
Publisher: Elsevier Science Publishers
Document Type: Report; Brief article
Length: 207 words

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Abstract :

Keywords Inflation targeting; Meta-regression analysis Abstract This paper uses a meta-regression analysis (MRA) to evaluate the impact of publication selection bias as for the macroeconomic effects of inflation targeting (IT) -- a popular approach to implementing monetary policy -- documented in the existing literature. Using 8,059 point estimates from 113 studies, we show that a significant part of the documented positive effects of IT on inflation and, to some extent, output growth volatility, is in fact due to publication selection bias. In particular, results pointing to lower inflation volatility and higher real GDP growth tend to be favored by researchers, as well as those pointing to statistically significant macroeconomic effects. However, even after controlling for these two types of biases, we find IT to be correlated with lower inflation and higher real GDP growth. Differently, the evidence on the IT-inflation volatility relationship is found to be less clear. Author Affiliation: (a) International Monetary Fund (IMF), Washington, DC, USA (b) University of Paris Ouest, Nanterre-La Défense, Nanterre, France * Corresponding author at: IMF, 700 19th Street N.W., Washington, DC 20431, USA. Article History: Received 24 November 2017; Revised 3 April 2020; Accepted 24 June 2020 Byline: Hippolyte W. Balima (a), Eric G. Kilama (b), René Tapsoba [] (a,*)

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Gale Document Number: GALE|A639954690