This research aims to assess the impacts IT (Inflation Targeting) policy adoption has on the resilience of the macroeconomics of OECD countries across 3 recessionary periods, with a focus on the labour market.
First, Cross-country Regression is used to establish an understanding of the relationship between macroeconomic variables and IT policy. Second, Panel Regression is used to control for the health of the economies prior to the crises, and in particular for the performance of countries that implemented IT policy before the crisis.
This paper finds that IT framework has brought minor improvements to the resilience of the labour market, and reduced housing market overvaluation, yet no clear improvements to the resilience of economic growth.
Despite the current trend toward IT policy, there exists a gap in the research regarding monetary policy choice. According to the current literature, “the lack of empirical evidence on the impact of monetary regimes on macroeconomic performance is striking” (Seim et al., 2013). Also, understanding the effects is of utmost importance for policymakers, especially central banks. This research aims to contribute to the literature and provide evidence for this discussion.