Empirical Assessment of Inflation Targeting (Analysis of Selected Economic Statistics)

Walerysiak, Grzegorz Article Empirical Assessment of Inflation Targeting (Analysis of Selected Economic Statistics) Comparative Economic Research. Central and Eastern Europe Provided in Cooperation with: Institute of Economics, University of Łódź Suggested Citation: Walerysiak, Grzegorz (2013) : Empirical Assessment of Inflation Targeting (Analysis of Selected Economic Statistics), Comparative Economic Research. Central and Eastern Europe, ISSN 2082-6737, Łodz University Press, Łodz, Vol. 16, Iss. 3, pp. 147-167, https://doi.org/10.2478/cer-2013-0023 This Version is available at: https://hdl.handle.net/10419/259158 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-nc-nd/4.0 10.2478/cer-2013-0023 GRZEGORZ WALERYSIAK* Empirical Assessment of Inflation Targeting (Analysis of Selected Economic Statistics) Abstract Inflation Targeting (IT) is used by about 30 countries (both developed and developing countries) around the world, and the number of countries was said to increase (IMF 2005). IT strategy was created as a way of getting inflation under control. The global crisis of recent years has given a new perspective to IT strategy and its effectiveness. The most obvious way of analyzing the effects of IT is to compare characteristics of inflation for periods before and after its implementation. So in my research I try to answer following comparative aspects: First, how does IT strategy work, and second, how does it work in the situation of global turmoil? I analyzed the years before and after implementation of IT strategy for those countries which employ it, as well as its implementation and effect during the time of the global crises. 1. Introduction Inflation and its volatility are considered as one the most harmful factors for an economy and economic agents. This is why IT strategy was designed and implemented in many countries, both developed and developing. Its role is to aid in getting inflation under control. Its usefulness has been confirmed by many researches and observations on inflation in IT countries. The recent years, which include the global financial crisis, present a very good opportunity to try and *PhD., Wrocław University of Environmental and Life Sciences, The Faculty of Life Sciences and Technology, Institute of Economics and Social Sciences 148 Grzegorz Walerysiak verify the effectiveness of the strategy in bringing and keeping inflation at a chosen level. The negative consequences of the global crisis, observed in many countries, both IT and non-IT, have given rise to voices claiming IT strategy has come to an end as a result of the global crisis. Although such statements seem to be overreactions, they can be viewed as an announcement of a change in the role of IT. Attention should be shifted from the exclusive relationship between monetary policy and inflation to the relationship between monetary policy and financial markets and their stability, such as asset price bubbles in various segments of the financial market. There are many empirical researches on the results of the IT strategy, but the crisis aspects seem to be new in the Polish literature on the subject. To assess the effect of IT strategy I analyze the basic information and parameters on inflation. I calculate average inflation and standard deviation for all countries employing an IT strategy in order to compare inflation and its volatility before and after the implementation of an IT strategy. The time range is from the 1980s to 2011, hence my observations cover the period of the global financial crisis. Thus I additionally try to determine the effects of the crisis on IT perspectives and compare the behavior of inflation in all these countries during the crisis. Data was taken from the database indexmundi, available at: http://www.indexmundi.com/factbook/. My hypothesis is the following: IT strategy is very helpful in bringing inflation to the desired level, and getting inflation under control, but it is not able to guarantee a stable inflation rate at a chosen level without regard to external conditions, especially in the complicated crisis environment. 2. IT strategy Inflation targeting was introduced in New Zealand in 1990. As Murray (2006) points out, when inflation targeting was implemented in New Zealand, it was viewed as a special case, because New Zealand was a small open economy that had just announced a number of audacious reforms aiming at liberalizing the economy, both nationally and internationally. These New Zealand actions were accepted with equanimity, because New Zealand was an emerging economy, too small to cause any problems for any other country. However, when the Bank of Canada announced that it was going to follow New Zealand’s lead a year later, the reaction was somewhat different and the introduction of an IT strategy in Canada was received with much less enthusiasm. Canada was quite different from New Zealand, since it was an industrialized economy with an average inflation in the 1980s of 6.5%, which in 1990 had decreased to 5%. As Murray Empirical Assessment of Inflation… 149 (2006 p. 3) notes, BIS bankers were puzzled as to why any prudent central bank would risk its reputation by accepting such an explicit obligation. However, following the Canada’s successful implementation of an IT strategy, developed countries decided to adopt one as well: United Kingdom, Sweden, Australia and so on. Some researchers identified three waves in the process of IT strategy’s expansion: the first wave covering years 1990-1993, when seven countries introduced an IT strategy; the second, and most numerous, wave took place in the period 1998-2002 (12 countries), and last one from 2005, when another eight countries decided to implement an IT strategy. The second wave in the process is specific, marked by the fact that a group of emerging-market economies began to adopt the strategy 1 . There are 27 IT countries 2 that currently use inflation targeting, and three other countries - Finland, the Slovak Republic and Spain – that adopted it but then abandoned it when they joined the EU. Table 1 below shows the countries currently using an IT strategy and gives data on the target inflation rate and average inflation rate in period from 1990-2008. Additionally the Table contains the data on year of adoption of an IT strategy. Table 1. Inflation targeting countries Country Inflation targeting adoption date Average inflation rate in period before IT Target inflation rate New Zealand 1990 10 1-3 Canada 1991 4.7 2 +/-1 United Kingdom 1992 6.5 2 +/-1 Sweden 1993 5.2 2 +/-1 Australia 1993 6.3 2-3 Czech Republic 1997 12.6 3 +/-1 Israel 1997 23.4 2 +/–1 Poland 1998 32 2.5 +/–1 Brazil 1999 657 4,5 +/–2 Chile 1999 21.5 3 +/–1 Colombia 1999 22.8 2-4 South Africa 2000 6.5 3-6 Thailand 2000 3.24 0,5-3 1 It is worth noting that in many emerging-market economies the adoption of IT was preceded by economic reforms, although in other countries IT was introduced rapidly, as a response to financial or currency crises that caused the abandonment of previous monetary arrangements and led to the search for new nominal anchors for monetary policy (case of Brazil, Libanio 2010, p. 1). 2 In 2012 the Dominican Republic announced the implementation of an IT strategy, but is not included in the analyses because of a lack of comparative data. 150 Grzegorz Walerysiak Korea 2001 5.2 3 +/–1 Mexico 2001 19.5 3 +/–1 Iceland 2001 3.2 2.5 +/–1.5 Norway 2001 2.5 2.5 +/–1 Hungary 2001 4.2 3 +/–1 Peru 2002 48.5 2 +/–1 Philippines 2002 8.9 4.5 +/–1 Guatemala 2005 6.9 5 +/–1 Indonesia 2005 8 4-6 Romania 2005 30.6 3.,5 +/–1 Turkey 2006 55.2 6.5 +/–1 Serbia 2006 9.8 4-8 Ghana 2007 18.7 14.5 +/–1 Dominican Republic 3 2012 16.2 5.5% in 2012, 4% as the long term target +/–1 Source: Roger S., (2010) Inflation Targeting Turns 20, Finance & Development March, p.1, own calculations, data from indexmundio. Table 1 shows that the countries adopting an IT strategy did it in different, sometimes opposite, conditions with regard to the rate of inflation. Some countries did it with a very low inflation rate i.e. Switzerland (0.9%), Norway (2.5%) and Iceland (3.2%), while others experienced a very high, even double or triple-digit, inflation rate, such as Armenia (710%), Brazil (657%), Turkey (55.2%) or Peru (48.5%). An even more varied situation appears when we take into account the whole inflationary history of given countries. Some of the countries had, in the period prior to adoption of an IT strategy, much higher inflation rates (even hyperinflation) 4 . Looking at the data in Table 1, one can also observe various ways of setting the target. Some countries chose a corridor, i.e. Serbia with a corridor of 4-8%, or a level with possible deviation, i.e. Poland (2.5+/–1p%), where the chosen level is 2.5% and the tolerated deviation 1% down or up. The choice of inflation target is not obvious, it is only important that it is greater than zero, and for the developed countries it is about 2%, while for the developing countries higher levels are indicated, oscillating at about 5%. Inflation targeting is one of many monetary policy strategies. Mishkin (2001. p. 1) presents the most important features of IT strategy, distinguishing IT from other monetary policy strategies. Hence inflation targeting encompasses: 3 The Dominican Republic’s case is not analyzed in this research because the period of its IT strategy is too short to draw conclusions. 4 More detailed analyses of IT countries inflation situation in next part of paper. Empirical Assessment of Inflation… 151 • public announcement of medium-term numerical targets for inflation; • institutional commitment to price stability as the primary goal of monetary policy, to which other goals are subordinated; • an information-inclusive strategy in which many variables, and not just monetary aggregates or the exchange rate, are used for establishing the setting of policy instruments; • increased transparency of the monetary policy strategy through communication with the public and the markets about the plans, objectives, and decisions of the monetary authorities; • increased accountability of the central bank for attaining its inflation objectives. But these features are not only characteristics of an IT strategy. According to Heintz and Ndikumana (2010, p. 6), the importance and uniqueness of IT lies in the crucial relation between strategy and inflation expectations: “If inflation targeting does not have a significant impact on expectations, inflation targeting may not be overly distinct compared to monetary policy which simply attempts to reduce inflation, or sustain inflation at low levels.” As Hammond (2012, p.5) states. a major advantage of inflation targeting is that it combines elements of both rules and discretion in monetary policy, and can be therefore often characterized as “constrained discretion”. An IT framework combines a numerical target for inflation in the medium term (rule) and a response to economic shocks in the short term (discretion) King (2005, p. 14). 3. Review of empirical studies on IT strategy IT strategy works in a specific manner for a country’s economic environment, while influencing the environment at the same time. Thus two types of empirical approaches can be distinguished. The first focuses on the results of IT strategy, and the second on conditions (necessary, favorable and adverse) in which IT works. IT was designed to tame inflation, so the most obvious way of empirical verification of IT is assessment of the impact of IT on inflation, its volatility, and inflation expectations in a given country. An analysis of inflation and its volatility can yield answers to questions concerning the effects and effectiveness of IT strategy. This is done by comparing inflation records of a given country or group of countries (i.e. developed and developing countries) before and after the implementation of an IT strategy. In addition to the one-country approach comparative methodology can also be used. This approach compares the achievements of an IT country with similar countries 152 Grzegorz Walerysiak which have not applied an IT strategy. This can help answer the question whether an IT strategy is unique and constitutes the only way of controlling inflation. Other authors deal with other problems and variables affected by IT strategy, such as the costs of deflation, conducting of monetary policy, exchange rate, sacrifice ratio, interest rate, output, financial variables, vulnerability to crisis, or current account. The second string of researches and empirical studies concentrates on the implications of some specific features of the IT regime. This investigates such factors as the influence of different degrees of central bank credibility on the trade-off between output and inflation in IT countries (Céspedes, Soto 2005) or the “fear of floating” strategy as an optimal policy in emerging market economies that adopt IT (Gallego, Jones 2005). Other issues include the pro-cyclical and asymmetric nature of monetary policy in three Latin American IT countries (Brazil, Chile and Mexico) and the implications for economic stabilization and growth in these economies (Libanio 2005), as well as the usefulness of an IT strategy for highly financially dollarised economies (Leiderman et al. 2006). Reviews of the literature on empirical analyses of IT has been carried out by, inter alia, Garcia-Solanes and Torrejón-Flores (2006), Angeriz and Arestis (2007), and Hammond (2012). Garcia-Solanes and Torrejón-Flores (2006) provides a review of empirical studies on the results of IT strategy before 2006 and it may be said that the obtained results are difficult to term conclusive with respect to proving the hypothesis that IT is a conducive monetary policy strategy. In a similar vein, Angeriz and Arestis concluded that the empirical evidence available in 2007 produced mixed results, and that the case with respect to developing countries is less clear-cut. Also Hammond (2012, p. 6) states that the empirical evidence on the performance of inflation targeting is not unanimous, although he supports the thesis that IT exercises a positive impact on inflation and inflation expectations, both in industrialized and emerging market economies (EMEs). Tables 2 and 3 below show empirical results in a synthetic way. Table 2 demonstrates the results of empirical studies supporting the hypothesis that IT is effective way of conducting monetary policy, while Table 3 concentrates on those researches questioning the above hypothesis. Empirical Assessment of Inflation… 153 Table 2. Synthetic characteristics of chosen empirical researches supporting IT Author(s) Year Scope Conclusions Corbo, Landerrechte, SchmidtHebbel 2002 industrial and developing IT countries IT contributed to improving the macroeconomic results in both groups of countries Calderón, SchmidtHebbel 2003 Latin America and Caribbean countries IT countries have been able to reduce both inflation rates and inflation-target misses systematically following adoption of the new monetary regime Batini, Kuttner, Laxton 2005 EMEs IT in EMEs brings about significant positive results in those countries, compared to those that follow other strategies IMF 2005, 2006 EMEs IT in EMEs brings significant benefits to the IT countries, compared to countries following other strategies; when IT is linked to an improvement in macroeconomic performance, it also brings about lower risk of currency crises relative to other alternative regimes King 2005 industrial countries and EMEs IT strategy, by anchoring expectations and enforcing credibility, reduces variability in the output gap and lowers the sacrifice-ratio Rose 2007 IT and non-IT countries There is very little difference between current account averages of targeting and non-targeting countries Guillermo Ortiz Martínez 2008 Emerging economies Once the preconditions for a stable economy are met, IT can be used to lead the economy from a highto a low-inflation equilibrium, since the correction of fundamentals may not be sufficient to eliminate high inflation Habermeier et al 2009 IT countries Inflation-targeting countries appear to have done better than others in minimizing the inflationary impact of the 2007 surge in commodity prices CarvalhoFilho 2010 The monetary policy of IT countries has appeared to be more suited to dealing with the crisis Roger 2010 low-income IT and non-IT countries Among low-income economies, non-IT countries experienced larger increases in inflation than IT countries, although their growth rates fell by similar amounts Source: own elaboration. A review of the information presented in Table 2 supports the hypothesis that IT is a good way of achieving objectives such as stabilizing inflation, eliminating inflation expectations, increasing GDP growth, or shifting the economy to a low inflation equilibrium. The conclusion that IT has a beneficial impact on improvements in overall economic performance is derived from such 154 Grzegorz Walerysiak observations that inflation levels, inflation volatility, and interest rates have declined after countries adopted inflation targeting, and output volatility has not worsened after the adoption of inflation targeting (Mishkin, Schmidt-Hebbel, 2007 p. 292) Table 3. Synthetic characteristics of chosen empirical researches questioning the usefulness of IT Author(s) Year Scope Conclusions Bernanke, Woodfort 5 1999 developed and EMSs IT does not make a difference in cost nor the speed of price stabilization compared to alternative regimes Rogoff 2003 The decrease in worldwide inflation can be erroneously recognized as a result of inflation targeting Levin, Natalucci, Piger 2004 emerging markets IT is not associated with an instantaneous decline in private-sector inflation forecasts, especially over the long-term horizon; inflation expectations are not noticeably more volatile in non-IT vs. IT economies Mello, Moccero 2007 Latin America The effects of IT on both interest rates and output volatility are unclear in all analyzed countries McDermott, McMenamin 2008 Latin American countries There are different reactions of IT and non-IT central banks, but this has not resulted in lower inflation expectations Walsh 2009 developed economies Macroeconomic experiences among both inflation targeting and non-targeting developed economies have been similar Sobrino 2010 19 IT countries Current account balances worsen after the adoption of inflation targeting, even after accounting for global shocks Source: own elaboration. The results in Table 3 indicate a variety of reservations and conditions regarding the economic outcomes of IT strategies in different groups of countries. They show that IT can be treated as a cost-free way of stabilizing inflation only under certain conditions, with many claims regarding co-integrity, because the lower inflation achieved by countries using IT may be caused by domestic reforms or by conducive international conditions, which resulted in a worldwide trend of declining inflation levels and volatility, interest rates, and output volatility in the 1990s (Mishkin, Schmidt-Hebbel, 2007 p. 292). Hence IT strategy should not be considered as a unique way of achieving low and stable inflation. 5 The volume edited by Bernanke and Woodford (2005) explores many dimensions of IT for both developed and emerging market economies. Empirical Assessment of Inflation… 161 crisis year of 2008 (from 0.7% in 2007), which may be the cause of the observed increase in the standard deviation of 0.75% to 0.95%. Peru: Another country with a spectacular record of taking inflation under control, with very high inflation in the years 1980-1991 turning into hyperinflation (3400% in 1989). The 1992-1994 period brought inflation down to low double-digits (23% in 1994). Following the implementation of IT the next three years brought inflation to below 4%, and in the years 1999-2012 the average inflation rate was 2.6%, with a standard deviation of 1.4%. In 2008 inflation rose to about 6% (an outlier), which was an increase from 1.8% in 2007. Its elimination further improves the results of the analyzed period. Philippines: A country with relatively stable inflation before IT, with only one period of very high inflation (1984, at 47%). Following the stabilization of inflation, another episode of high inflation occurred in 2002, and IT was introduced, followed by relatively low inflation (average 5.2%, although there was a large growth in the inflation rate in 2008 to over 9%, from 2.8% in 2007). Has a quite unstable standard deviation of 2.1%. Poland: a country with hyperinflation and high inflation in its history (585% in 1990), but with a decline in inflation from 60% in 1991 to 7.3% in 1999, when IT was introduced. Thereafter there was a decline in inflation (average in 2001-2011 - 2.9%) as well as its variability, although still high at 2.5%. Recorded an increase in inflation in 2008 to over 4%, up from 2.8% in 2007. Romania: In 1991 there was a sharp rise in inflation from almost zero to 125%, which after five years reached a maximum value of 250%. A decline in inflation can be observed since 1998, and the introduction of IT in 2005 continued this trend. The crisis year of 2008 marked a rise in inflation to nearly 8%, with an average of about 6% (from 4.8% in 2007). Serbia: A country with a short history of IT. Before IT Serbia had high inflation, exceeding even 80% in 2001, then inflation decreased and stabilized, and the introduction of IT did not especially lower inflation, although within the IT period the volatility in inflation is less. There was an increase in inflation from 6.4% (2007) to 12.4% (2008), exceeding the highest permissible inflation targeting level by 4 percentage points. South Africa: the years 1980-1989 were a period of relatively high and variable inflation - double-digit but not exceeding 20. In 1999-2001 inflation stabilized at a 5-6% level, which was not maintained thereafter. Since then inflation has increased and has become more unstable, with periods of both deflation and inflation, with a recorded high inflation in 2008 at 11.5% (increase from 7.1% in 2007). 162 Grzegorz Walerysiak Sweden: This country adopted IT quite early, in 1993. In the early 1980s it had a relatively high inflation of about 18%, but this was reduced to 3% in 1986, after which it began to rise, exceeding 4% for a few years. This period ends with the introduction of IT, and from that time on inflation has not exceeded 4%. It did increase in 2008 to more than 3%, while the average for the period prior was 1.4%. The standard deviation is slightly differentiated (1.14% before and 1.02% after), which may suggest even more volatility of inflation during the IT period. Switzerland: Looking at its history of inflation it can be said that before the year 2000, and particularly in the period 1980-1995, Switzerland was a country with a very unstable inflation rate, albeit at a relatively low level. It reached a level of about 6% (years 1981 and 1991), but in between, in the year 1986, it dropped to a level of 0.75%. After the introduction of IT it experienced low and stable inflation, which was clearly disturbed in the 2008-2009 crisis years, when it experienced both deflation and inflation accelerated above average (an increase in inflation from 0.7% (2007) to 2.4% (2008). The standard deviation of the IT period is higher, which may indicate a greater variability of inflation. Thailand: An Asian country with a relatively stable inflation rate in the years 1982-1999. Before the introduction of IT, the average inflation rate in the period was 3.24%, (or 4.02% if we eliminate from analysis the Asian crisis year of 1990, which saw a nearly 10% deflation). During IT the average inflation has been 2.7%, although it reflects a clear rising trend and inflation is currently close to 4%. The crisis year 2008 had a substantial effect on inflation, when it increased to over 5% from 2.3% in 2007. There was also an almost one percent deflation in 2009. One can assume that IT has not contributed significantly to the decline in inflation (after a period of low inflation, it has returned to the pre-IT level) nor to reducing variability. Turkey: A country with a very high and variable inflation before IT. Following the introduction of IT there has been a clear stabilization at a relatively high (but in Turkish terms low) 8% inflation rate. It has high stability, and experienced a decrease in inflation from 8.8% (2007) to 6.3%, but there are too few observations to appraise the effects and effectiveness of IT in Turkey. United Kingdom: Before 1993 inflation was quite high, but with observed periods of accelerating inflation and deflation. After the IT period it experienced stable and low inflation, but in the years 2008-2010 a marked change in the behavior of inflation occurred, with fluctuations of 2 to 3 percentage points, and an increase in inflation from 2.3% (2007) to 3.6% (2008), slightly exceeding the highest permissible inflation targeting level. Empirical Assessment of Inflation… 163 Table 6. Selected statistical parameters of inflation in the IT countries Country average inflation standard deviation other data before IT after IT before IT after IT before IT after IT Armenia 710.7 5.84 1645.516 2.26 2.341 (average inflation for prior 7 years) 2.5 Australia 6.3 2.7 2.6 1.2 Brazil 657.5 6.5 912.4 2.6 5,09(average inflation for prior 2 years) Canada 4.7 2.0 0.6 0.7 Colombia 22.8 5.7 4.7 1.9 Czech Republic 12.6 2.7 4.8 1.5 Chile 21.5 4.9 6.7 3.5 Ghana 18.7 13.2 7.8 4.0 Guatemala 6.9 6.4 1.0 2.9 Hungary 21.2 5.1 7.2 1.2 Iceland 3.2 6 1.6 3.2 Indonesia 8 7.2 3.1 3.2 Israel 23.4 5.5 11.1 4.4 Korea 5.2 3 2.1 0.9 Mexico 19.5 8.7 9 8.15 SD in 2001-12 0,8 New Zealand 10 2.2 5 1 Norway 2.5 1.9 0.7 1 Peru 48.5 4.3 20.4 3.4 Philippines 8.9 5.2 3.8 2.1 Poland 32 3.8 17.5 2.5 Romania 30.5 6.12 77.31 0.9 Serbia 9.8 9.4 4.5 2.5 South Africa 6.5 5.9 2.3 1.4 Sweden 5.2 1.4 1.14 1.02 Switzerland 0.9 0.7 0.6 0.77 Thailand 3.2 2.8 3.6 1.8 (4,02), 2 (without data for 1990) Turkey 55.2 8.1 27.1 1.6 United Kingdom 6.5 2.1 3.7 0.9 Source: own calculations based on data from indexmundi: http://www.indexmundi.com/factbook/ 164 Grzegorz Walerysiak Observing the data in Tables 5 and 6 and analyzing the characteristics of IT countries. it appears that the IT strategy is in many cases associated with decreased inflation and a reduction in its volatility. Spectacular performers are countries such as Armenia, Brazil, Peru, Philippines, Turkey and the European countries, where inflation fell from double digits to single digits, often of only a few percent. The most spectacular results were achieved by Brazil, where inflation fell from 657% to 6.5%, and Armenia, where the difference between average inflation before and after implementing IT is more than 700%. But the inability of IT in some countries to achieve the desired level of inflation and its variability seems to suggest that an IT strategy is not a guarantee for stabilizing inflation. With respect to the impact of the financial crisis, one can note that in almost all IT countries an increase in inflation was observed, with decreases occurring in only two countries (Hungary and Turkey). What’s more, in some countries the inflation rate exceeded the highest permissible inflation targeting level. So IT failed to keep inflation along the desired path, although some have suggested that inflation-targeting countries have done better than others in minimizing the inflationary impact of the crisis of 2008 (Habermeier et al. 2009 p. 29). 6. Conclusions IT strategy seems to be an attractive way of conducting monetary policy because of its simplicity on one hand, and on other owing to the belief that monetary policy can be reduced to getting inflation under control. Low and stable inflation creates a good framework for domestic agents, as well as external investors. IT strategy seems to have different meanings for different countries. Some implemented it after achieving low inflation and the strategy was to confirm to all agents that the central bank is committed to maintain this level, while for others IT is a way to achieve the desired level of inflation and its variability. So the most interesting question is whether IT is itself a strategy of building a low and stable inflation rate, or whether it is only a confirmation of reforms and adjustments aimed at removing the structural, economic and sometimes social and institutional causes of inflation. The type of analysis done in this paper is not able to answer this question. It does however permit the conclusion that an IT strategy is associated with a decrease in inflation and in its volatility, and in some countries, like Brazil or Armenia, spectacular outcomes can be observed. But other countries have not achieved the desired inflation level yet. IT has turned out not to be a guarantee of low and desired inflation levels, because in times of crisis an increase in inflation took place in almost all IT countries. What’s more, in some countries the inflation rate exceeded the Empirical Assessment of Inflation… 165 highest permissible inflation targeting level. 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(2010), The Effects of Inflation Targeting on the Current Account: An Empirical Examination, 'Economics Bulletin’, Vol. 30 no. 2 The Dominican Republic Central Bank News; Monetary Board Authorizes Central Bank to Adopt Inflation Targeting, 2012-01-19 available at http://www.bancentral.gov.do/english/index-e.asp Walsh C. (2009), Inflation targeting: What have we learned?, ‘International Finance, 12:2 Streszczenie EMPIRYCZNA OCENA STRATEGII CELU INFLACYJNEGO (ANALIZA WYBRANYCH DANYCH EKONOMICZNYCH) Strategia celu inflacyjnego jest jedną z wielu strategii monetarnych, charakterystyczne dla nie jej koncentracja na inflacji jako zmiennej ekonomicznej, którą bank centralny może zarządzać i jednocześnie przekonanie, że inflacja jest tak istotna dla podmiotów gospodarczych i gospodarki, że można za jej pomocą wpływać na zachowania podmiotów. Celem zarządzania inflacją w strategii celu inflacyjnego jest sprowadzenie i utrzymywania jej na wybranym pożądanym poziomie. Celem artykułu jest weryfikacja empiryczna, czy strategia celu inflacyjnego okazała się być skuteczna w osiąganiu celu, jaki przed nią się stawia oraz czy możliwość realizacji tego celu jest uzależniona od warunków zewnętrznych, jakim jest kryzys globalny. Analiza obejmuje wszystkie kraje stosujące strategię celu inflacyjnego i obejmują lata 1990-2010. Poczynione badania pozwalają wyciągnąć wniosek, że obserwacja sytuacji inflacyjnej przed i po wprowadzeniu strategii celu inflacyjnego wskazuje na spadek inflacji i jej zmienności po wprowadzeniu strategii. Nie można jednak jednoznacznie mówić o zależności przyczynowo-skutkowej. Obserwacja zachowania inflacji w krajach celu inflacyjnego w czasie kryzysu globalnego wskazuje, że z reguły nie udało im się utrzymać inflacji na wcześniejszym poziomie, a niejednokrotnie inflacja przekroczyła dopuszczalne zakładane poziomy. Pytanie jest czy jest to efekt odejścia od zobowiązań zawartych w strategii, czy też niemożności jej realizacji. W obu przypadkach może to wskazywać na nieadekwatność strategii celu inflacyjnego w sytuacji globalnego kryzysu ekonomicznego i przynajmniej na konieczność jej modyfikacji.