September 2018 issue contents
The Impact of Monetary Strategies on Inflation Persistence

by Evžen Kočendaa and Balázs Vargab


We analyze the impact of price-stability-oriented monetary strategies on inflation persistence by using a time-varying coefficients framework in a panel of sixty-eight countries over 1993-2013. It is shown that inflation targeting (IT) is effective even during and after the financial crisis and that explicit IT has a stronger effect on taming inflation persistence than implicit IT. It is shown that exchange regimes with the euro as a reserve currency are more effective than those using the U.S. dollar. On the other hand, U.S. inflation persistence exhibits a disproportionally lower effect on other countries' persistence than its German counterpart.

JEL Code: C22, C32, E31, E52, F31.

Full article (PDF, 46 pages, 775 kb)

a Institute of Economic Studies, Charles University (Prague) and Euro Area Business Cycle Network
b OTP Fund Management and Corvinus University of Budapest