The Quality Of Monetary Policy And Inflation Performance: Globalization And Its Aftermath

With a few unfortunate exceptions the last three decades have seen reductions in inflation around the world to the point that many would argue that further improvements in price stability would offer only limited welfare gains. This experience is the result of many factors, some of which are country-specific. In this paper the authors seek to isolate one of the factors, namely, the improvement in the quality of monetary policy. There are two novel aspects to the study. Firstly, they essentially estimate a gravity-like model. Secondly, they propose generally a more exhaustive analysis of the potential role of a large number of institutional factors than has been done before.