Previous research on inflation targeting (IT) has focused on high‐income countries and emerging market economies (EMEs). Only recently have sufficient data accumulated for the performance of IT in ...low‐income countries (LICs) to be assessed. We show that IT has not so far been as effective in reducing inflation in LICs as in EMEs. Relatively low central banks’ instrument independence in LICs, associated with weak restrictions limiting a central bank’s lending to the government, helps explain this result.
Abstract
An inflation-targeting regime has been in place in Ghana since 2007, but the inflation rate has remained persistently high. During the 2007–2017 period, inflation exceeded the announced ...target by four percentage points on average, despite the target never falling below a relatively unambitious 8% per annum. We investigate whether the poor conduct of monetary policy is responsible for this outcome, and find that it is not. Monetary policy reaction functions are similar to those estimated for countries with successful monetary policies, and interest rates respond in the theoretically recommended way to inflation shocks.
This thesis critically analyses the deficits-inflation nexus and inflation targeting in lower-income countries. Previous research has found a significant relationship between fiscal deficits and ...inflation in low-income countries, but not in high-income countries. It is shown here that the crucial factor is the quality of institutions. The relationship holds in countries with weak institutions, but not in those with strong institutions, even if their per capita GDP is quite low. The implication is that institutional improvements can enhance macroeconomic outcomes in poor countries. The robustness of the findings is tested using various measures of institutional quality. On the other hand, we provide new insights on inflation targeting (IT) in low-income countries. Previous research on inflation targeting has focused on high-income and emerging market economies since low-income countries (LICs) were slow to adopt the framework. Only recently has enough data accumulated for the performance of IT in LICs to be assessed. We show that unlike in emerging markets, in LICs IT is not been effective in reducing inflation. Weak institutions, a typical feature in LICs, do help explain this especially when we examine their role under floating exchange rate regimes. Finally, we characterise monetary policy in Ghana, one of the earliest low-income countries to adopt an IT framework, but where IT has not been very successful in reducing the levels and volatility of inflation within a modified Taylor rule. We investigate whether poor conduct of monetary policy is responsible for the poor performance of IT and find that is not. Monetary policy reaction functions are similar to those estimated for countries with successful monetary policies, and interest rates respond in the theoretically recommended way to inflation shocks.
The negative consequences of sprawling metropolitan regions have attracted attention in both academia and in practice regarding how to better design settlements and alter travel behavior in a quest ...to curtail vehicle emissions. Studies that have attempted to understand the nexus between land use, travel and vehicle emissions have not been able to address the issue of self-selection in a satisfactory manner. Self-selection occurs when households choose their residential location based, in part, on expected travel behavior. This non-random experience makes the use of traditional regression frameworks that strongly rely on random sampling, unsuitable. This replication study’s purpose was to examine the impact of land use and travel on CO2 emissions using the Heckman (1979) sample selection model in Portland Metropolitan Area. three research questions guided this study: (1) Does self-selection to drive a motor vehicle lead to reduction in CO2 emissions? (2) Does land use and automobile travel influence the decision to drive after controlling for self-selection? (3) What land use and travel factors determine CO 2 emissions after controlling for self-selection? The findings suggest driving has a statistically significant negative effect on estimated CO 2 and that most land use variables significantly affect driving behavior.
The negative consequences of sprawling metropolitan regions have attracted attention in both academia and in practice regarding how to better design settlements and alter travel behavior in a quest ...to curtail vehicle emissions. Studies that have attempted to understand the nexus between land use, travel and vehicle emissions have not been able to address the issue of self-selection in a satisfactory manner. Self-selection occurs when households choose their residential location based, in part, on expected travel behavior. This non-random experience makes the use of traditional regression frameworks that strongly rely on random sampling, unsuitable. This replication study's purpose was to examine the impact of land use and travel on CO2 emissions using the Heckman (1979) sample selection model in Portland Metropolitan Area. three research questions guided this study: (1) Does self-selection to drive a motor vehicle lead to reduction in CO2 emissions? (2) Does land use and automobile travel influence the decision to drive after controlling for self-selection? (3) What land use and travel factors determine CO2 emissions after controlling for self-selection? The findings suggest driving has a statistically significant negative effect on estimated CO2 and that most land use variables significantly affect driving behavior.
This thesis critically analyses the deficits-inflation nexus and inflation targeting in lower-income countries. Previous research has found a significant relationship between fiscal deficits and ...inflation in low-income countries, but not in high-income countries. It is shown here that the crucial factor is the quality of institutions. The relationship holds in countries with weak institutions, but not in those with strong institutions, even if their per capita GDP is quite low. The implication is that institutional improvements can enhance macroeconomic outcomes in poor countries. The robustness of the findings is tested using various measures of institutional quality. On the other hand, we provide new insights on inflation targeting (IT) in low-income countries. Previous research on inflation targeting has focused on high-income and emerging market economies since low-income countries (LICs) were slow to adopt the framework. Only recently has enough data accumulated for the performance of IT in LICs to be assessed. We show that unlike in emerging markets, in LICs IT is not been effective in reducing inflation. Weak institutions, a typical feature in LICs, do help explain this especially when we examine their role under floating exchange rate regimes. Finally, we characterise monetary policy in Ghana, one of the earliest low-income countries to adopt an IT framework, but where IT has not been very successful in reducing the levels and volatility of inflation within a modified Taylor rule. We investigate whether poor conduct of monetary policy is responsible for the poor performance of IT and find that is not. Monetary policy reaction functions are similar to those estimated for countries with successful monetary policies, and interest rates respond in the theoretically recommended way to inflation shocks.
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