Assessing Inflation Targeting through Intervention Analysis

Posted: 24 Jun 2008

See all articles by Alvaro Angeriz

Alvaro Angeriz

University of Cambridge - Department of Applied Economics

Philip Arestis

University of Cambridge - Department of Land Economy; Universidad del País Vasco (UPV/EHU)

Date Written: April 2008

Abstract

The aim of this paper is to deal with the empirical aspects of the new monetary policy framework, known as Inflation Targeting. Applying Intervention Analysis to multivariate Structural Time Series models, which avoids certain biases encountered in the use of conventional regression estimators, new empirical evidence is produced in the case of a number of OECD countries. These results demonstrate that although Inflation Targeting has gone hand-in-hand with low inflation, the strategy was introduced well after inflation had begun its downward trend. But, then, Inflation Targeting locks in low inflation rates. The evidence produced in this paper suggests that non-Inflation Targeting central banks have also been successful on this score.

JEL Classification: E52

Suggested Citation

Angeriz, Alvaro and Arestis, Philip, Assessing Inflation Targeting through Intervention Analysis (April 2008). Oxford Economic Papers, Vol. 60, Issue 2, pp. 293-317, 2008. Available at SSRN: https://ssrn.com/abstract=1150610 or http://dx.doi.org/gpm047

Alvaro Angeriz (Contact Author)

University of Cambridge - Department of Applied Economics ( email )

Sidgwick Avenue
Cambridge, CB3 9DE
United Kingdom

Philip Arestis

University of Cambridge - Department of Land Economy ( email )

19 Silver Street
Cambridge, CB3 9EP
United Kingdom

Universidad del País Vasco (UPV/EHU)

Barrio Sarriena s/n
Leioa, Bizkaia 48940
Spain

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