Abstract
Inflation rate targeting (IT) has recently become a popular monetary policy tool to fight inflation, in advanced as well as emerging market economies, by curtailing inflationary expectations. The evidence of IT's role in anchoring expectations is mixed. In this paper, the authors quantitatively examine IT's effectiveness in reducing Turkish inflation by comparing forecasted inflation to actual inflation. Furthermore, the possibility of a structural change following IT is examined. The authors show that observed levels of inflation would not have been any different from the forecasted ones if IT had not been adopted. They also fail to find a structural break in inflation at the time of the adoption of IT and conjecture that this might be due to the public's earlier belief that the central bank's policy would not be inflationary.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.