Factors Leading to Inflation Targeting – The Impact of Adoption
KOF Working Papers No. 346
15 Pages Posted: 29 Nov 2013
Date Written: November 28, 2013
This paper examines how the analysis of inflation targeting (IT) adoption is affected by allowing for a structural change after adoption, using panel probit models for 60 countries over the period 1985-2008. Our findings suggest that there is a structural change after IT adoption. Including the post-adoption period when estimating the factors of IT adoption leads to biased results when interested in the question as of what drives countries’ decision to adopt IT.
Keywords: inflation targeting, panel probit
JEL Classification: E42, E52
Suggested Citation: Suggested Citation