The Impact of Inflation Targeting on Inflation
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Abstract
The purpose of the paper is to assess the impact of the transition to the inflation targeting regime on inflation in modern conditions. To achieve this goal, we carry out econometric modeling of the impact of this monetary policy regime on the dynamics of the overall price level. As an empirical strategy, we use the estimation of models with fixed effects on cross-country panel data containing information up to and including 2022. In addition, to clarify the long-term effects of changing the monetary policy regime, we use the difference of differences estimator with the inclusion of additional control variables. The modelling results demonstrate that even in today’s shock conditions for the global economy, inflation targeting remains an effective tool for achieving price stability. This effect is observed for various subsamples of countries. In relation to Russia, it is important to conclude that inflation targeting is an effective tool for achieving price stability for oil-exporting countries.