Title page
Contents
Abstract 3
1. Introduction 4
2. Description of the Data 8
3. Inflation in IT vs. Non-IT Countries: Level, Volatility, Anchoring 11
3.1. Level and Volatility 11
3.2. Inflation Anchoring 12
4. Inflation Growth in IT vs. non-IT Countries: Cross-Country Results 15
5. Inflation Growth in IT vs. Non-IT Countries: Country-Level Analysis 19
6. Conclusion 24
A. Appendix 26
References 29
Table 1. Mean Inflation in Advanced Economies and EMDEs 8
Table 2. Adoption of Inflation Targeting-Country List and Summary Statistics 10
Table 3. Average Inflation in IT and Non-IT Country Groups 12
Table 4. Average Inflation Volatility 12
Table 5. Mean Inflation Expectations 13
Table 6. Standard Deviation of Inflation Expectations 13
Table 7. Determinants of 3-Year Ahead Inflation Expectations 14
Table 8. Determinants of Inflation Expectations for High Inflation EMs 14
Table 9. Impact of IT on Inflation 16
Table 10. Impact of IT on Inflation 17
Table 11. Impact of IT on Growth 18
Table 12. Inflation and Growth Outcomes in IT Adopters vs. Synthetic Counterparts 22
Table 13. High Inflation Economies 26
Table 14. Sample Periods for Tables 9 & 10 27
Table 15. Impact of IT on Inflation 28
Table 16. Impact of IT on Growth 28
Figure 1. Inflation Declines in Early Adopters of Inflation Targeting (1989-99) 4
Figure 2. Median Inflation, 1960-2020 9
Figure 3. Change in Inflation and Initial Inflation in IT countries 11
Figure 4. Illustration of Regression to the Mean 17
Figure 5. Illustration of Regression to the Mean 18
Figure 6. Adopters vs. Synthetic Counterparts-Illustrative Examples 20
Figure 7. IT and Growth Performance - Synthetic Control Analysis 23
Figure 8. IT and Growth Performance - Synthetic Control Analysis 23