Sustainability, Vol. 11, Pages 5654: Assessing the Sustainability of Inflation Targeting: Evidence from EU Countries with Non-EURO Currencies (Sustainability)

This paper examines the impact of inflation targeting (IT) adoption on macroeconomic outcomes (unemployment, inflation, exchange rate, and its volatility) and banking concentration by comparing the non-EUR European countries that adopt an IT strategy to non-EUR European countries that do not adopt an IT strategy for the period of 2005–2015. The results suggest that IT has no impact on inflation, unemployment, and the exchange rate raises the systemic risk. Moreover, in non-IT countries, central banks are more concerned to minimizing the exchange rate volatility to better protect the debtors with foreign currency (EURO) loans.