Inflation targeting is best response to natural disasters, study says

Hard pegs and inflation accommodation worsen long-term effects, BoI paper finds

Rail storm damage

Central banks should not deviate from inflation targeting even after natural disasters, a new study published by the Bank of Italy finds.

The paper, authored by Alessandro Cantelmo, Nikos Fatouros, Giovanni Melina and Chris Papagergious, examines links between natural disasters and monetary policy. It looks at International Monetary Fund (IMF) reports between 1999 to 2017. 

The researchers find that in 56% of cases, central banks decided to tighten monetary policy, but in the rest, they

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