Inflation Targeting and Business Cycle Synchronization
Robert P. Flood
International Monetary Fund (IMF) - Research Department; CENTRUM Business School; National Bureau of Economic Research (NBER)
Andrew K. Rose
University of California - Haas School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)
CEPR Discussion Paper No. DP7377
Inflation targeting seems to have a small but positive effect on the synchronization of business cycles; countries that target inflation seem to have cycles that move slightly more closely with foreign cycles. Thus the advent of inflation targeting does not explain the decoupling of global business cycles, for two reasons. Indeed business cycles have not in fact become less synchronized across countries.
Number of Pages in PDF File: 47
Keywords: bilateral, data, empirical, GDP, insulation, regime
JEL Classification: F42
Date posted: August 26, 2009
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