Economic performance under different monetary policy frameworks

David Cobham*, Peter Macmillan, Connor Mason, Mengdi Song

*Corresponding author for this work

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Abstract

We examine the economic performance (inflation and growth) associated with different monetary policy frameworks, presenting unconditional and conditional analyses, and using predictions of countries’ monetary policy framework choices to address the issue of endogeneity. We find some differences in performance associated with the different monetary policy frameworks, together with a general improvement over time which is explained in part by the trends towards inflation targeting and more precise monetary control, that is from changes in the choice of framework, but in part, and perhaps more strongly, reflects a more general trend towards better economic performance related to changes in decision-making within the frameworks. Our results suggest that the choice of MPF is an important, but by no means the only, determinant of economic performance, and therefore not the only consideration for policymakers looking to improve economic performance.

Original languageEnglish
JournalJournal of Policy Modeling
Early online date12 Mar 2022
DOIs
Publication statusE-pub ahead of print - 12 Mar 2022

Keywords

  • Economic growth
  • Exchange rate targeting
  • Inflation
  • Inflation targeting
  • Monetary policy framework

ASJC Scopus subject areas

  • Economics and Econometrics

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