Does the volatility of exchange rates changed under inflation targeting framework in emerging market?
This article examines whether or not the adoption of inflation targeting (IT) reduces exchange fluctuation and induced economic growth. We investigate (IT) in emerging market, focusing on the relationship between the exchange rates on inflation and output growth. Our research will focus on the conduct of monetary policy under inflation targeting, with respect to fluctuations in the exchange rates. Based on panel data of 28 emerging countries, of which 13 those have adopted inflation targeting policy over the period 1980-2013. Our results confirm that (IT) regime guarantees the stability of exchange rates, the stability of economic growth and controlling inflation.
Keywords: Economic Growth, Emerging Markets, Exchange Volatility, Inflation Targeting.
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