THE INFLATION TARGETING REGIMES ADOPTION AND THE CENTRAL BANKS REACTION FUNCTIONS

Abstract

The empirical experiments in this paper evaluates if the inflation targeting regime adoption (ITR) with different institutional arrangements – flexible or rigid – has any influence in the central banks’ reaction function behavior in ITR. For this intent, it is composed segregate panel samples, according to the institutional flexibility, and made econometric exercises by using dynamic panel techniques. The results suggest differences in the reaction function behavior of the central banks with rigid ITR in face of that institutionally flexible.