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The European Green Deal after Corona Implications for EU climate policy
Policy Contribution

Inflation-Targeting, Flexible Exchange Rates and Macroeconomic Performance since the Great Recession

by Thomas Barnebeck Andersen / Nikolaj Malchow-Møller / Jens Nordvig
27 March 2014

Inflation-Targeting, Flexible Exchange Rates and Macroeconomic Performance since the Great Recession

Thomas Barnebeck Andersen / Nikolaj Malchow-Møller / Jens Nordvig

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Has inflation targeting (IT) conferred benefits in terms of economic growth on countries that followed this particular monetary policy strategy during the crisis period 2007-12? This paper answers this question in the affirmative. Countries with an IT monetary regime with flexible exchange rates weathered the crisis much better than countries with other monetary regimes, predominantly countries with fixed exchange rates. Part of this difference in growth performance reflects differences in export performance during the initial years of the crisis, which in turn can be explained by real exchange rate depreciations. However, IT seems also to confer other benefits on the countries above and beyond the effects from currency depreciation.

Thomas Barnebeck Andersen and Nikolaj Malchow-Møller are in the Department of Business and Economics, University of Southern Denmark. Jens Nordvig is Head of Fixed Income Research Americas, Nomura Securities.


About the Authors


  • Author
    Thomas Barnebeck Andersen
    Thomas Barnebeck Andersen
  • Author
    Nikolaj Malchow-Møller
    Nikolaj Malchow-Møller
  • Author
    Jens Nordvig
    Jens Nordvig
Inflation-Targeting, Flexible Exchange Rates and Macroeconomic Performance since the Great Recession
Download Publication

2950 Downloads