IMF research finds inflation targeting can dampen risk premiums


A working paper, published by the International Monetary Fund (IMF) on January 23, studies the effects of inflation targeting on a country's risk premium, and finds a "significant" impact – in some cases.

Authors Armand Fouejieu A and Scott Roger analyse data from 40 emerging and high-income countries, 19 of which have inflation targets, during the period 1989–2010. They find inflation targeting reduces risk premiums most in emerging economies, but the results "seem much less robust" for high

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