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MBF 2025-wl-11331-Inflation Targeting in the Third World: A Kaleckian Perspective

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Analysis reveals inflation targeting may not reduce stagflation in third world economies, suggesting a Kaleckian framework offers better insights.

Inflation targeting might fail to control stagflation in developing economies like India, and challenges the New Keynesian model.
The IS curve's responsiveness to interest rates is crucial for effective monetary policy, emphasizing structural constraints in third world economies.
The study suggests revisiting Kaleckian approaches, as traditional models may not adequately address the economic realities of developing nations.
Empirical testing within the New Keynesian framework indicates limitations in standard inflation targeting practices under certain economic conditions.

Azad et al. (2025) studied this question.

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Analysis reveals inflation targeting may not reduce stagflation in third world economies, suggesting a Kaleckian framework offers better insights.