The Effect of Inflation Targeting (IT) Policy on the Inflation Uncertainty and Economic Growth in Selected African and European Countries

Nene, Shelter Thelile; Ilesanmi, Kehinde Damilola; Sekome, Mashapa

doi:10.3390/economies10020037

Cited by 13 publications

(10 citation statements)

References 58 publications

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“…The results of this study show that there are different influences of the IT regime in terms of its influence on the GDP growth rate that are in line with the results obtained by S. T. Nene, D. I. Kehinde and S. Mashapa (2022) in their research done in the selected European and African countries.…”

Section: Discussionsupporting

confidence: 90%

“…The statistics show that, in Albania, where the IT regime was introduced in that period, the GDP still has unstable movement, whereas in Romania, it had the tendency to grow during the analyzed period. Certainly, as one of the reasons for different influences, the strategy for Serbia, Romania, Turkey and Albania can indicate various economic conditions, which is also pointed to in the research studies by S. T. Nene, D. I. Kehinde and S. Mashapa (2022). The results of this study show that there are different influences of the IT regime in terms of its influence on the GDP growth rate that are in line with the results obtained by S. T. Nene, D. I.…”

Section: Discussionsupporting

confidence: 89%

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Effects of the implementation of the inflation targeting regime on economic growth

Stevanović¹,

Milenković²,

Paunović³

2022

Ekon horizonti

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This research study is focused on the examination of the influence of the introduction and implementation of the monetary Inflation Targeting (IT) regime: the level of the inflation rate and the Gross Domestic Product (GDP) growth rate, as well as inflation and the GDP volatility. Conditional variance is calculated by fitting an empirical Generalized Autoregressive Conditional Heteroskedasticity (GARCH) model to an annualized quarterly date for the period from 1993Q1 to 2020Q3, all in order to assess volatility. The results of the regression model showed that there was a positive statistical significance between the instability of inflation and the instability of the growth rate of the GDP in the three analyzed countries (namely in Albania, Turkey and the Republic of Serbia). The result of introducing the IT regime when the GDP growth rate volatility is concerned is statistically significant in Serbia and Turkey and led to reduction in the GDP volatility and stabilization. However, the applied regression model indicated that, in the case of Albania and Romania, the introduction of the IT regime did not have a statistically significant impact on the GDP growth rate volatility.

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Section: Discussionsupporting

confidence: 90%

Section: Discussionsupporting

confidence: 89%

Effects of the implementation of the inflation targeting regime on economic growth

Stevanović¹,

Milenković²,

Paunović³

2022

Ekon horizonti

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“…Moreover, the identical results investigating the WB economies have been argued by Durguti et al (2021) that there is a positive association between these two variables. Whereas, the contradictory results of this study turn out to be with the author Nene et al (2022), where they have argued that in the countries of some African economies, they have a positive impact, while in the countries of Europe, they have a significant negative impact.…”

Section: Econometric Findingscontrasting

confidence: 87%

Evaluating Macroeconomic Factors and Their Influence on Economic Growth: Empirical Evidence From Western Balkan Economies

Arifi¹

2022

JLIA

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This research aimed to identify and evaluate the impact of some macroeconomic components on economic growth performance. The data applied in the analysis were secondary data, including six countries from 2005 to 2020. The econometric approach applied was the fixed effect regression approach to economic growth as a dependent variable. The study also applied several diagnostic tests and the Hausman test to select between fixed and random effects. The data provided after the analysis show that inflation and foreign direct investment have a significant positive impact, while public debt has a significant negative impact. Moreover, unemployment and population growth have shown statistically insignificant results. The study from the aspect of the original contribution provides arguments and applies two variables that are very little addressed in the context of economic growth. The study results provide critical information for policymakers, economists, and researchers and provide arguments for a sound and proactive debate on these variables.

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“…Rangasamy (2009) and Wolassa (2015) found that not only has IT had a significant impact on decreasing inflation persistence in SA, but IT has also been effective in decreasing inflation uncertainty. Nene et al (2022) compared African IT (SA and Ghana) and European IT (Poland and the Czech Republic) countries. They found that the IT policy significantly reduced inflation uncertainty in the European countries but was insignificant in reducing inflation uncertainty in SA.…”

Section: Literature Reviewmentioning

confidence: 99%

Is inflation uncertainty a self‐fulfilling prophecy in South Africa?

Westhuizen

Eyden

Aye

2023

South African J Economics

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Inflation uncertainty causes macroeconomic ills and instability in the economy. This paper investigates if rising levels of inflation uncertainty serve as a source of higher inflation outcomes or vice versa, to determine if inflation uncertainty is potentially a self‐fulfilling prophecy. In addition, this paper examines the impact of inflation targeting, implemented in South Africa in February 2000, on the level of inflation and inflation uncertainty. Using a generalised autoregressive conditional heteroskedasticity (GARCH) and GARCH‐in‐mean model and monthly data spanning the period 1970:01 to 2022:05, the empirical outcomes from this study suggest the existence of a bi‐directional relationship between inflation and inflation uncertainty, with strong evidence in favour of the Friedman–Ball hypothesis and weaker evidence in support of the Cukierman–Meltzer hypothesis. This study also finds that inflation targeting has contributed significantly to reducing the level of inflation and inflation uncertainty since its adoption as policy framework. Time‐varying Granger causality tests accounting for instabilities underscore the above results, namely that inflation uncertainty led to increased inflation uncertainty in the full pre‐inflation targeting period, whereas increased uncertainty led to increased inflation only during the decade preceding inflation targeting. The results heed important policy implications, as it is imperative that inflation is kept low, stable and predictable.

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The Effect of Inflation Targeting (IT) Policy on the Inflation Uncertainty and Economic Growth in Selected African and European Countries

Cited by 13 publications

References 58 publications

Effects of the implementation of the inflation targeting regime on economic growth

Effects of the implementation of the inflation targeting regime on economic growth

Evaluating Macroeconomic Factors and Their Influence on Economic Growth: Empirical Evidence From Western Balkan Economies

Is inflation uncertainty a self‐fulfilling prophecy in South Africa?

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