Open Access BASE2013

Factors Leading to Inflation Targeting: The Impact of Adoption

Sturm, Jan-Egbert; Samarina, Anna

Open Access

Abstract

This paper examines how the analysis of inflation targeting (IT) adoption is affected by allowing for a structural change after adoption, using panel probit models for 60 countries over the period 1985-2008. Our findings suggest that there is a structural change after IT adoption. Including the post-adoption period when estimating the factors of IT adoption leads to biased results when interested in the question as of what drives countries' decision to adopt IT.

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