TY - JOUR AU - Mishkin,Frederic S. AU - Schmidt-Hebbel,Klaus TI - Does Inflation Targeting Make a Difference? JF - National Bureau of Economic Research Working Paper Series VL - No. 12876 PY - 2007 Y2 - January 2007 UR - http://www.nber.org/papers/w12876 L1 - http://www.nber.org/papers/w12876.pdf N1 - Author contact info: Frederic S. Mishkin Columbia University Graduate School of Business Uris Hall 817 3022 Broadway New York, NY 10027 Tel: 212-854-3488 Fax: 212/662-8474 E-Mail: fsm3@columbia.edu Klaus Schmidt-Hebbel Central Bank of Chile Agustinas 1180 Santiago, Chile E-Mail: kschmidt@bcentral.cl AB - Yes, as inferred from panel evidence for inflation-targeting countries and a control group of high-achieving industrial countries that do not target inflation. Our evidence suggests that inflation targeting helps countries achieve lower inflation in the long run, have smaller inflation response to oil-price and exchange-rate shocks, strengthen monetary policy independence, improve monetary policy efficiency, and obtain inflation outcomes closer to target levels. Some benefits of inflation targeting are larger when inflation targeters have achieved disinflation and are able to make their inflation targets stationary. Despite these favorable results for inflation targeting, our evidence generally does not suggest that countries that adopt inflation targeting have attained better monetary policy performance relative to our control group of highly successful non-inflation targeters. However, inflation targeting does seem to help all country groups to move toward performance of the control group. The performance attained by industrial-country inflation targeters generally dominates performance of emerging-economy inflation targeters and is similar to that of industrial non-inflation targeting countries. ER -