What question did this study set out to answer?

To assess the impact of formally adopting inflation targeting on inflation rates, economic growth, and the anchoring of inflation expectations across advanced, emerging, and developing economies.

August 15, 2026Economic InquiryOpen Access

Macroeconomic effects of formal adoption of inflation targeting

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Authors

SBSurjit Bhalla KBKaran Bhasin PLPrakash Loungani

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Overview

Synthetic control analysis reveals mixed inflation benefits and no systematic growth penalties across diverse economies, indicating diminishing returns for recent inflation targeting adopters.

Key Points

To assess the impact of formally adopting inflation targeting on inflation rates, economic growth, and the anchoring of inflation expectations across advanced, emerging, and developing economies.
Analyzed macroeconomic trends in advanced economies and emerging markets and developing economies that adopted inflation targeting before and after 2000.
Conducted country-level comparative evaluations using the synthetic control method.
Early adopters (pre-2000) consistently experienced declines in inflation rates, while post-2000 adopters achieved similar inflation reductions in only about 50% of cases.
Synthetic control analysis identified statistically significant inflation gains in approximately one-third of country cases, with limited evidence indicating systematic harm to economic growth.

Cite This Study

Bhalla et al. (2026) studied this question.

synapsesocial.com/papers/6a80194675c2e31742c855b3 https://doi.org/10.1111/ecin.70081

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August 15, 2026Economic InquiryOpen Access

Macroeconomic effects of formal adoption of inflation targeting

View Full Paper

Ask AI

Bookmark

Authors

SBSurjit Bhalla KBKaran Bhasin PLPrakash Loungani

Discussion

Member takes

Overview

Synthetic control analysis reveals mixed inflation benefits and no systematic growth penalties across diverse economies, indicating diminishing returns for recent inflation targeting adopters.

Key Points

To assess the impact of formally adopting inflation targeting on inflation rates, economic growth, and the anchoring of inflation expectations across advanced, emerging, and developing economies.
Analyzed macroeconomic trends in advanced economies and emerging markets and developing economies that adopted inflation targeting before and after 2000.
Conducted country-level comparative evaluations using the synthetic control method.
Early adopters (pre-2000) consistently experienced declines in inflation rates, while post-2000 adopters achieved similar inflation reductions in only about 50% of cases.
Synthetic control analysis identified statistically significant inflation gains in approximately one-third of country cases, with limited evidence indicating systematic harm to economic growth.

Cite This Study

Bhalla et al. (2026) studied this question.

synapsesocial.com/papers/6a80194675c2e31742c855b3 https://doi.org/10.1111/ecin.70081

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