Does Adoption of Inflation Targeting Reduce Exchange Rate Volatility and Enhance Economic Growth
Journal of World Economic Research
Volume 2, Issue 6, December 2013, Pages: 104-109
Received: Nov. 27, 2013; Published: Dec. 30, 2013
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Author
Yutaka Kurihara, Department of Economics, Aichi University, Nagoya, Japan
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Abstract
Recently, inflation targeting has been adopted in many countries. One important achievement derived from the assessment of this framework can be exchange rate stability, as exchange rate is thought to relate to the target of the inflation rate itself or a stable inflation rate. This article provides empirical analysis of whether or not the adoption of inflation targeting framework has reduced exchange rate volatility. Also, as the final goal of this framework is to attain sound economic growth with a stable and adequate inflation rate, the relationship between inflation targeting and economic growth is examined. The results show that inflation targeting reduces exchange rate volatility and causes economic growth.
Keywords
Exchange Rate, Growth, Inflation Targeting, Volatility
To cite this article
Yutaka Kurihara, Does Adoption of Inflation Targeting Reduce Exchange Rate Volatility and Enhance Economic Growth, Journal of World Economic Research. Vol. 2, No. 6, 2013, pp. 104-109. doi: 10.11648/j.jwer.20130206.11
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