The Research On The Asymmetric Effect Of Inflation Targeting

Since New Zealand adopted the inflation targeting two decades ago, there are many literatures focusing on the inflation targeting. According to the existing researches, the macroeconomic effect of the inflation targeting seems to be asymmetrical between the industrialized countries and the emerging market countries. This paper studies all countries that have adopted inflation targeting by choosing inflation rate, GDP growth rate and their volatilities as a highly recapitulative indicator to summarize a country’s macroeconomic performance. Meanwhile, the paper uses the PSM method to verify this asymmetry. The result is that the asymmetry indeed exists between the industrialized countries and the emerging market countries. Therefore, this result will be useful for policy making in emerging market countries including China.