In the United States, inflation targeting has many advocates, but many others are skeptical about adopting such a policy. Given this debate and inflation targeting’s growing adoption around the world, now is a good time to review the economic performance of some inflation-targeting countries. In this article, Mike Dotsey examines five countries that have been targeting inflation for at least 10 years and whose inflation rates, though fairly well contained before inflation targeting, were nonetheless considered too high by policymakers. For purposes of comparison, he also looks at the economic performance of six noninflation-targeting countries.
This article appeared in the Third Quarter 2006 edition of Business Review.View the Full Article