Economic Performance and Inflation Targeting in Developing Economies

Abstract

This paper investigates the effect of inflation targeting (IT) on inflation, output growth and interest rates. Based on panel data of 53 developing countries, of which 20 that have adopted IT by the end of 2007. In this study we use the differences-in-differences approach of Ball and Sheridan (2005) to analyze the relationship between IT and economic performance over the period 1980-2012. The results show that the empirical analysis confirms that the effect of inflation targeting in developing economies will contribute effectively to achieve economic performance.