Inflation Targeting and Fiscal Rules

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Inflation Targeting and Fiscal Rules is written by Jean-Louis Combes and published by International Monetary Fund. It's available with International Standard Book Number or ISBN identification 1498378218 (ISBN 10) and 9781498378215 (ISBN 13).

The paper examines the joint impact of inflation targeting (IT) and fiscal rules (FR) on fiscal behavior and inflation in a broad panel of advanced and developing economies over the period 1990-2009. The main contribution of the paper is to show that, as suggested by the theoretical literature, interactions between FR and IT matter a great deal for policy outcomes. Specifically, the combination of FR and IT appears to deliver more disciplined macroeconomic policies than each of these institutions in isolation. In addition, the sequencing of the monetary and fiscal reforms plays a role: adopting FR before IT delivers stronger results than the reverse sequence.