The choice of inflation targeting regimes for inclusive growth: Lessons from southern countries

Abstract

This study tries to shed light on whether the inflation targeting framework behaves as a growth enhancing strategy in some selected southern countries. The study also investigates the best choice of inflation targeting regimes. Using panel data regression model for a growth regression, we found that this monetary policy framework has a relatively significant positive effect on economic growth. This means that even in terms of economic growth, using inflation as a nominal anchor is a better framework to conduct monetary policy than using exchange rate or money aggregate. The results also revealed that among different types of inflation targeting frameworks, full‐fledged can be the best choice for the selected southern countries.