TITLE:
Monetary Policy in Inflation Targeting Regimes: An Empirical Analysis Based on VEC Model
AUTHORS:
Eliane Cristina de Araújo, Fernando Ferrari-Filho, Mateus Ramalho Ribeiro da Fonseca, Pedro Perfeito da Silva
KEYWORDS:
Inflation Target Regimes, Monetary Policy, VEC Model
JOURNAL NAME:
Theoretical Economics Letters,
Vol.14 No.6,
December
6,
2024
ABSTRACT: This article assesses the performance of the Inflation Targeting Regimes (ITR) for six countries over the period 1990-2020. Empirically, this article was based on the Vector Error Correction model (VEC). The results indicate that the ITRs were not able to generate the expected outcomes in some of the analyzed countries, mainly in developing ones. In other words, ITR seems not to be appropriate for emerging countries because the main cause of inflation in these countries is not a “demand-pull” shock, as is supposed by the ITR. In this regard, the diversity of the observed results was due to the structural and institutional specificities of each country, but also because of the limits of the theoretical framework on which the ITRs are based.