Inflation Targeting Does Not
Matter: Another Look at OECD
Economies’ Output Sacrifice
Ratios
Ricardo D. Brito
Insper Working Paper
WPE: 215/2010
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citação completa do documento
Inflation Targeting Does Not Matter: Another Look
at OECD Economies’ Output Sacrifice Ratiosℵ
Ricardo D. Brito*
Insper, São Paulo, Brazil
February 2010
Abstract
Recently in this journal, Gonçalves and Carvalho (2009) concluded that inflation targeters were
able to bring inflation down at less cost than nontargeters (p. 242). This comment shows that their
conclusion is not robust, but instead is the result of comparing a particular subset of IT
disinflations with non-simultaneous
disinflations that
occurred under very different
macroeconomic conditions. In their sample, simple extensions like justifiably varying the
treatment group of inflation targeting disinflations, to control for common time-varying effects or
to control for the Maastricht Treaty effects, prove that inflation targeting does not matter.
JEL classification: E42; E52.
Keywords: inflation targeting, sacrifice ratio
ℵ
I thank Eurilton Araújo, Cyntia Azevedo, Alexandre Carvalho, Vitorio Corbo and Lucio Sarno for helpful
discussions. All errors are mine only responsibility.
*
Associate Professor, at the Economics Department. E-mail address: [email protected]. Phone:
55-11-4504-2431; Fax: 55-11-4504-8415. Postal address: Rua Quatá, 300, São Paulo, SP 04546-042,
Brazil.
1
IN A RECENT PAPER IN THIS JOURNAL, Gonçalves and Carvalho (2009)
compared four inflation targeting (IT) disinflation episodes selected ad hoc from a
broader set of OECD disinflation events and concluded that “inflation targeters suffered
smaller output losses during disinflations when compared to nontargeters” (p. 233). In
this comment, I argue that their conclusion is a result of the peculiar subset of
disinflations they label as IT, and of comparing them to costly disinflations that happened
years earlier under different economic conditions. I show that IT does not matter for an
expanded, more historically grounded, subset of IT disinflations (i.e., for a more
representative treatment group), nor does it matter for Gonçalves and Carvalho’s specific
IT subset if controlled for differences in common economic conditions before and after
the mid nineties (i.e., with controls for common time-varying effects). Conformation to
the Maastricht Treaty shows much more economic and statistical importance than the IT
policy, at the same time the latter efficiency is retrenched by the control for the former
big costs (i.e., with controls for observables). When I analyze my expanded set of IT
disinflations, together with controls for the worldwide 1990s trend of falling inflation, the
IT disinflations turn significantly more costly than the non-IT ones, inverting Gonçalves
and Carvalho’s result from IT benefits to IT costs. If the Maastricht’s Treaty subscriber
characteristic is jointly added, I even find strongly significant bigger output losses for
targeters than for nontargeters. In sum, there are no statistical grounds to conclude that IT
positively matters from Gonçalves and Carvalho’s sample.
In the rest of this comment I review Gonçalves and Carvalho’s methodology,
denominated GC hereafter, criticize their treatment group, define another set of IT
2
disinflations based on historical evidence, control for common time-varying effects that
are relevant in the evaluation of non-simultaneous treatment, and control for the
simultaneous treatment of the Maastricht Treaty.
2. OUTPUT SACRIFICE RATIO AND INFLATION TARGETING IN OECD
COUNTRIES
According to Ball (1994), studying the cost of policy-induced shifts in inflation,
one should analyze the output sacrifice ratio of sizable disinflations. He suggested
considering disinflation events when the nine-quarter moving average of inflation,
denominated trend inflation, goes down by more than 2% per year from one of its peaks
to its following trough. A peak (trough) is a quarter in which trend inflation is higher
(lower) than in both the previous four quarters and the following four quarters. The
output sacrifice ratio of a disinflation is simply the output lost from the peak to four
quarters after the trough, divided by the trend inflation reduction during the episode.1
GC use Ball’s procedure to detect 61 disinflation events in OECD countries
during the 1980-2005 period, or 36 disinflation events during the 1990-2005 period,
among which they categorize five as under IT treatment (see GC’s Table 1 on p. 237-238,
reproduced here in Table 1 for 1990-2005). GC then adapt Ball’s (1994) regression
approach to test if IT affects the output sacrifice ratio of disinflations, in a model like:
1
The four quarters lead from the trough is to allow for the possibility that output takes some lag to recover
from the disinflation episode.
3
srn = c + α ⋅ π 0 n + β
1
+ θ ⋅ bn + η ⋅ Transpn + γ ⋅ ITn + ε n
dn
∀n
(1)
where srn is the output sacrifice ratio in the n-th cross-section disinflation episode. The
initial inflation, π 0 n , reduces the extent of nominal rigidity (Ball, Mankiw, and Romer
1988). d n is the number of quarters under disinflation and the speed of disinflation,
(1 d n ) ,
captures differences in cost between “gradualism” (Taylor, 1983) and “cold
turkey” (Sargent, 1983). GC also consider the average central government debt to GDP,
bn , as a measure of the difficulties faced by more indebted countries to convince the
private sector about their commitment to low inflation, and the transparency index,
Transpn , found by Stasavage (2003) to be negatively correlated with the sacrifice ratio.
The main variable of interest, IT, is a dummy variable that equals 1 if the country
inflation targets and 0 otherwise, and ε is the error term. For the vector of parameters
(c, α , β , θ , η , γ ) ,
GC estimate negative and highly significant γ s for both sample
periods and for a variation of (1) that excludes bn (see GC’s Table 2 on p. 240), thus
concluding that IT countries suffered less to disinflate than non-IT countries.
<Insert Table 1 around here>
In the interest of concision, I criticize GC’s conclusion of IT efficiency from the
perspective of their Model 2, Sample a, reported in the fifth column of their Table 2,
which is reproduced in the first column of my Table 2. This benchmark choice is without
4
loss of generality and the (non-)results I show hold for their other models as well.2
Furthermore, the 1990-2005 period (their Sample a) is closer to the ideal of an immutable
environment for the evaluation of cross-section treatment than the 1980-2005 period
(their Sample b), given the first IT disinflation only happened after 1990. Column (1) of
my Table 2 shows that GC’s estimated coefficients for initial inflation, velocity of the
episode and debt to GDP have the signs predicted by previous theoretical works.
Although insignificant, transparency estimate has the opposite sign as expected and does
not make economic sense. Finally, regarding the focus of their study and this critique, the
IT coefficient estimate is negative, economically important and statistically significant,
suggesting that the IT policy lowers the output sacrifice ratio of disinflations.
I question GC’s conclusions in three aspects. First, related to the treatment group,
by labeling as “IT disinflation” only those disinflationary episodes that started at least
two quarters after regime adoption, they just select five treated elements: Australia
1995:3-1998:2, Czech Republic 2001:1-2003:2, Germany 1991:3-1996:2, New Zealand
1995:4-1998:4, and Turkey 2003:4-2005:1 (see column “IT dummy” in their Table 1,
reproduced in my Table 1, column “GC's IT disinflation”). Among these, Germany has
never explicitly adopted the IT regime,3 and Turkey is actually not considered in GC’s
analysis, given it does not present the Transp measure they control for in the regressions.
Because it is supported by such a small treated group, GC’s conclusion of IT
effectiveness is subject to the same small sample robustness doubts they point out in
2
Since GC do not find evidence of selection bias in their Table 4, my preference for focusing on their
Table 2 models is justified.
3
Mishkin (1998) argues that both the Bundesbank and the Swiss Bank followed an implicit inflation
targeting regime, but the Bundesbank has never explicitly adopted it. Thus, for the same reason GC
categorized Germany 1991:3-1996:2 as an IT disinflation, Switzerland 1991:1-1998:2 should also have
been.
5
Bernanke et al. (1999) (see GC, p. 235). For example, just by not labeling Germany as an
IT and indeed including Turkey in the sacrifice ratio regressions (with the exclusion of
the Transp control variable), their estimated IT benefit falls by almost 40%, as shown in
column (2) of my Table 2.
<Insert Table 2 around here>
Still related to the IT treated elements, and more fundamentally, GC’s
categorization is ad hoc and questionable on historical grounds. As documented in Ball
and Sheridan (2003) and Mishkin and Schmidt-Hebbel (2007), IT regimes were often
adopted with the intermediate goal of lowering inflation to a constant medium term
target, and disinflation policies were immediately put to work. It is not by coincidence
that GC’s use of Ball’s algorithm mechanically detected ten disinflation events
coinciding with IT regime establishments out of fifteen countries that adopted the system
in the OECD. In GC’s sample, coincidences of the beginning of a disinflation with formal
IT adoption are noted in Canada, Czech Republic, Hungary, Iceland, Korea, Mexico,
New Zealand, Poland, Spain and Sweden.
4
Historical reports to support that these
episodes happened under explicit IT regimes can be found in Johnson (1997) and
Bernanke et al. (1999) for Canada; OECD (1998) for Czech Republic; OECD (2002b) for
Hungary; OECD (2001) for Iceland; Hoffmaister (2001) and OECD (1999) for Korea;
Schmidt-Hebbel and Alejandro (2002) and OECD (2002a) for Mexico; Hutchinson and
Walsh (1998) and Bernanke et al. (1999) for New Zealand; Gottschalk and Moore (2001)
4
The other 5 inflation targeters in the GC’s sample are Australia, Finland, Switzerland, Turkey and United
Kingdom.
6
and OECD (2000) for Poland; Sobczak (1998) for Spain; and Bernanke et al. (1999) for
Sweden, among others. Once these events are relabeled as “Disinflation in explicit IT
regime” in my Table 1, I show that the IT treatment is economically unimportant and
statistically insignificant in column (3) of my Table 2. Thus, in terms of output sacrifice
ratio, I find no efficiency gain for the disinflations documented as IT treated.
My second criticism is that GC infer IT effectiveness from the evaluation of nonsimultaneous cross-section treatment without controls for common time variation, which
is particularly relevant in the 1990s, when a worldwide trend of falling inflation and
macroeconomic volatility occurred. Although to control for common time-varying effects
is not trivial, and thus questionable in a cross-section set-up, to ignore the time change in
common macroeconomic conditions is only acceptable if the treated and controls groups
experienced approximately the same combination of time effects variation. This is clearly
not the case in their study, given that most of the IT disinflations took place after the mid1990s and the bigger cost non-targeter disinflations started mainly in the early 1990s. In
columns (4) and (5) of my Table 2, I respectively present estimates for the subsets of (i)
“disinflation at least 2 quarters after explicit IT adoption” and (ii) “disinflation in explicit
IT regime”, controlled for the starting date of the episode: until 1994:4; between 1995:1
and 1999:4; and since 2000:1 (this last period without a time dummy). In both columns,
the coefficient estimate for “Starts until 1994:4” is positive and significant, indicating
that the common macroeconomic conditions of the early nineties were more costly for
disinflations. By simply allowing for three different initial conditions, I am able to reveal
that IT is not significant, even for the most stringent subset of disinflations that happened
at least two quarters after explicit IT adoption, as shown in column (4). In greater contrast
7
with GC’s findings, I can now show in column (5) that the lost output is bigger and
marginally significant for the subset of explicit IT disinflations than for the nontargeters.
Basically, these results indicate that a considerable part of the relative gains of IT
documented by GC does not really come from the IT policy, but instead is due to an
overstated average cost for their control group, which also contains the more expensive
disinflations from the early 1990s.
Third, GC do not attempt to isolate the improvement in performance exclusively
due to the IT regime from other observable sources that might overlap in the crosssection. For example, the Maastricht Treaty entered into force in 1993, which set in
motion the macroeconomic convergence process that led to the creation of the Euro in
1999. As Wyplosz (1997) describes on p. 11, “… the tight monetary policies aimed at
meeting the inflation criteria (of the Maastricht Treaty) have helped create a slow-growth
climate for Europe in the 1990s, with double-digit unemployment rates …” Thus, in
studying the IT effects in OECD countries, it is necessary to control for the simultaneous
adjustment to comply with the Maastricht Treaty that its signatory states were making
(see column “Maastricht Treaty adjustment” in my Table 1). In my Table 2, columns (6)
and (7), I respectively show estimates for the subsets of (i) “disinflation at least 2 quarters
after explicit IT adoption” and (ii) “disinflation in explicit IT regime” jointly controlled
for the Maastricht Treaty adjustment and different initial dates. In both columns, the
increased cost of the Maastricht adjustment is strongly significant and more economically
important than the IT effect. The IT effects become even less beneficial in both columns
(6) and (7) relative to (4) and (5), indicating that part of GC’s documented IT effects is
actually a consequence of their overstated average costs for the control group, which does
8
not separate the simultaneous more costly Maastricht treatment. In column (7), I even
find a strongly significant output loss for the IT framework that could equally be used to
claim that inflation targeters suffered bigger output losses during disinflations when
compared to nontargeters.
2. CONCLUDING REMARKS
This comment revisits GC’s analysis of IT performance in the OECD
disinflations. By use of their data and methodology, I show that the IT policy becomes
insignificant if one defines the treatment group as the disinflation episodes that started
after the country had explicitly adopted the IT regime. To isolate the effect on
performance exclusively due to the IT framework, I control for initial common timevarying conditions and for the simultaneous Maastricht Treaty adjustment effort, both of
which affect the evaluation of cross-section IT treatment. These controls show more
economic importance than the IT effect and also eliminate GC’s documented IT gains. In
sum, because these simple and sensible extensions even indicate that inflation targeters
paid more to bring inflation down, I conclude that IT does not matter for lowering
disinflation costs in GC’s sample.
LITERATURE CITED
Ball, Laurence. (1994). “What Determines the Sacrifice Ratio?” In Monetary Policy,
edited by Gregory Mankiw, pp. 155-182. Chicago, IL: The University of Chicago Press.
9
Ball, Laurence, Gregory Mankiw and David Romer. (1988). “The New Keynesian
Economics and the Output-Inflation Trade-off.” Brookings Papers on Economic Activity
1, 1-65.
Ball, Laurence, and Niamh Sheridan. (2005). “Does Inflation Targeting Matter?” In The
Inflation Targeting Debate, edited by Ben S. Bernanke and M. Woodford, pp. 249-276.
Chicago, IL: The University of Chicago Press.
Bernanke, Ben, Thomas Laubach, Frederic Mishkin, and Adam Posen. (1999). Inflation
Targeting: Lessons from the International Experience. Princeton, NJ: Princeton
University Press.
Gonçalves, Carlos Eduardo S., and Alexandre Carvalho. (2009). “Inflation Targeting
Matters: Evidence from OECD Economies’ Sacrifice Ratios.” Journal of Money Credit
and Banking 41, 233-243.
Gottschalk, Jan, and David Moore. (2001). “Implementing Inflation Targeting Regimes:
The Case of Poland.” Journal of Comparative Economics 29, 24-39.
Hoffmaister, Alexander. (2001). “Inflation Targeting in Korea: An Empirical
Exploration.” IMF Staff Papers 48, n.2, 317-343.
Hutchinson, Michael M. and Carl E. Walsh. (1998). “The output-inflation tradeoff and
central bank reforms: Evidence from New Zealand.” The Economic Journal 108, n. 448,
703-725.
Johnson, David. (1997). Expected Inflation in Canada 1988-1995: An Evaluation of Bank
of Canada Credibility and the Effect of Inflation Targets.” Canadian Public Policy Analyse de Politics 23, n.3, 233-258.
Mishkin, Frederic. (1999). “International Experiences with Different Monetary Policy
Regimes” NBER Working Paper 6965, National Bureau of Economic Research, February
1999.
Mishkin, Frederic S., and Klaus Schmidt-Hebbel. (2007). “Does Inflation Targeting
Make a Difference?” NBER Working Paper 12876, National Bureau of Economic
Research, January 2007.
Organization for Economic Co-operation and Development (OECD) (1998) “Economic
Surveys: Czech Republic”, v. July 1998, Issue 12, 29-48.
Organization for Economic Co-operation and Development (OECD) (1999) Economic
Surveys: Korea, v. Sept. 1999, 51-76.
Organization for Economic Co-operation and Development (OECD) (2000) Economic
Surveys: Poland, v. March 2000, Issue 2, 41-61.
10
Organization for Economic Co-operation and Development (OECD) (2001) Economic
Surveys: Iceland, v. April 2001, Issue 11, 33-51.
Organization for Economic Co-operation and Development (OECD) (2002a) Economic
Surveys: Mexico, v. April 2002, Issue 7, 14-32.
Organization for Economic Co-operation and Development (OECD) (2002b) Economic
Surveys: Hungary, vol. July 2002, Issue 10, 45-66.
Sobczak, Nicolas. (1998). “Disinflation in Spain: The Recent Experience.” IMF Working
Paper 98/106, International Monetary Fund, August 1998.
Schmidt-Hebbel, Klaus. and Werner Alejandro. (2002). “Inflation Targeting in Brazil,
Chile, and Mexico: Performance, Credibility, and The Exchange Rate.” Central Bank of
Chile Working Paper 171, Central Bank of Chile, July 2002.
Sargent, Thomas. (1983). “Stopping Moderate Inflations: The Methods of Poincare and
Thatcher.” In Inflation, Debt, and Indexation, edited by Rudiger Dornbusch and Mario H.
Simonsen, pp. 54-98. Cambridge, MA: MIT Press.
Stasavage, David. (2003). “Transparency, Accountability and Monetary Institutions.”
Journal of Political Science 47, 389-402.
Taylor, John. (1983). “Union Wage Settlements During a Disinflation.” American
Economic Review 73, 981-93.
White, Halbert. (1980). “A Heteroskedasticity-Consistent Covariance Matrix Estimator
and a Direct Test for Heteroskedasticity.” Econometrica 48, 817-838.
Wyplosz, Charles. (1997). “EMU: Why and How It Might Happen.” Journal of Economic
Perspectives 11, 3-22.
11
TABLE 1 - Disinflation Episodes
Country
Australia
Australia
Austria
Belgium
Canada
Czech Rep.
Czech Rep.
Finland
Germany
Hungary
Hungary
Iceland
Italy
Italy
Japan
Korea
Korea
Mexico
Mexico
Mexico
New Zealand
New Zealand
Norway
Poland
Poland
Portugal
Episode
Initial
Inflation
1990:1–1993:1
1995:3–1998:2
1993:1–1998:4
1990:3–1998:4
1991:1–1994:1
1998:1–2000:1
2001:1–2003:2
1990:1–1993:2
1991:3–1996:2
1997:2–2001:2
2001:3–2003:1
2001:2–2003:3
1990:2–1994:1
1995:1–1998:3
1990:4–1995:3
1991:2–1993:2
1998:1–2000:1
1992:1–1993:4
1997:4–1998:4
1999:1–2005:1
1990:1–1992:4
1995:4–1998:4
1990:1–1993:4
1996:3–1998:4
1999:1–2003:2
1990:1–1999:1
7.14
3.55
3.75
3.43
4.8
8.85
4.25
6.21
4.57
19.17
8.13
6.16
6.43
4.69
3.11
8.81
5.4
18.28
19.44
15.64
5.76
3
4.28
19.45
9.6
12.95
Duration Debt/GDP
13
12
24
34
13
9
10
14
14
17
7
10
16
15
20
9
9
9
5
25
12
13
16
10
18
37
9.2
18.43
55.63
111.38
54.19
11.52
16.87
27.98
20.85
57.8
54.27
36.49
102.76
111.59
54.6
11.86
16.38
26.59
26.77
23.54
60.43
40.76
27.24
42.15
39.51
56.91
Sacrifice
ratio
6.57
1.18
5.92
21.18
11.3
2.89
3.53
16.67
-1.03
-1.02
-0.84
8.25
16.65
2.38
2.39
0.07
12.06
1.59
2.65
0.69
8.44
1.82
10.37
-0.99
-1.41
7.3
Disinflati
on at
least 2 Disinflati Maastrich
Starts
GC's IT
on in
t Treaty
Transpar
quarters
disinflati
until
ency
after
explicit adjustme
on
1994:4
explicit IT regime
nt
IT
adoption
3
0
0
0
0
1
3
1
1
1
0
0
0
0
0
0
1
1
2
0
0
0
1
1
4
0
0
1
0
1
4
0
0
1
0
0
4
1
1
1
0
0
2
0
0
0
1
1
2
1
0
0
0
1
0
0
0
0
0
0
0
0
0
1
0
0
0
0
1
0
0
4
0
0
0
1
1
4
0
0
0
1
0
3
0
0
0
0
1
2
0
0
0
0
1
2
0
0
1
0
0
3
0
0
0
0
1
3
0
0
0
0
0
3
0
0
1
0
0
4
0
0
1
0
1
4
1
1
1
0
0
4
0
0
0
0
1
0
0
0
0
0
0
0
0
0
1
0
0
4
0
0
0
1
1
Starts
between
1995:1
and
1999:4
Date of
adoption
0
1
0
0
0
1
0
0
0
1
0
0
0
1
0
0
1
0
1
1
0
1
0
1
1
0
Apr. 1993
Feb. 1991
Jan. 1998
Feb. 1993
Jun. 2001
Mar. 2001
Jan. 1998
Jan. 1999
Mar. 1990
Mar. 2001
Oct. 1998
(Continued)
12
TABLE 1 (continued) - Disinflation Episodes
Disinflati
on at
Starts
least 2 Disinflati Maastrich
GC's IT
Starts between
on in
Date of
Initial
Sacrifice Transpar
quarters
t Treaty
Country
Episode
Duration Debt/GDP
disinflati
until
1995:1
adoption
Inflation
ratio
ency
after
explicit adjustme
on
1994:4
and
explicit IT regime
nt
1999:4
IT
adoption
Slovak Rep.
1995:1–1997:1
11.11
9
19.56
-0.32
4
0
0
0
0
0
1
Slovak Rep.
2000:3–2002:1
11.07
7
31.92
0.77
4
0
0
0
0
0
0
Slovak Rep.
2003:4–2005:1
7.5
6
36.43
0.16
4
0
0
0
0
0
0
Spain
1994:4–1998:2
4.71
15
53.25
16.89
2
0
0
1
1
1
0
Nov. 1994
Sweden
1990:4–1992:4
9.53
9
47.43
5.62
4
0
0
0
0
1
0
Jan. 1993
Sweden
1993:1–1997:4
3.35
20
74.48
19.59
4
0
0
1
1
1
0
Switzerland
1991:1–1998:2
5.53
30
21.17
6.64
4
0
0
0
0
1
0
Jan. 2000
Turkey
2003:4–2005:1
18.72
6
73.33
-0.38
1
1
1
0
0
0
Jan. 2002
United Kingdom 1990:1–1992:4
8.64
12
32.98
5.39
4
0
0
0
0
1
0
Oct. 1993
United States
1990:2–1994:4
5.13
19
46.72
11.16
4
0
0
0
0
1
0
Note: Columns "Episode", "Initial Inflation", "Duration, "Debt/GDP", "Sacrifice ratio", "Transparency", and "Date of adoption" are from Gonçalves and Carvalho's
(2009) Table 1. Column "GC's IT disinflation" is the same dummy variable as GC's "IT dummy", also from their Table 1. Column "Disinflation at least 2 quarters after
explicit IT adoption" is a dummy variable that indicates disinflations that started at least two quarters after explicit IT regime adoption. "Disinflation in explicit IT
regime" is a dummy variable that indicates disinflations happened after explicit IT regime adoption. "Maastricht Treaty adjustment" is a dummy variable that indicates
disinflations occoring simultaneously with other macro adjustments to comply with the Maastricht Treaty. "Starts until 1994:4" is a dummy variable that indicates
disinflations starting until 1994:4. "Starts between 1995:1 and 1999:4" is a dummy variable that indicates disinflations starting between 1995:1 and 1999:4.
13
TABLE 2 - OLS Results
Regressor:
Constant
Initial inflation
Velocity
Debt/GDP
Transparency
(1)
9.43
(1.81)
-0.55
(-2.99)
-30.30
(-1.29)
0.05
(0.97)
0.67
(1.11)
(2)
8.99
(3.11)
-0.51
(-3.48)
-20.20
(-0.92)
0.07
(1.60)
(3)
8.69
(2.92)
-0.45
(-2.99)
-28.80
(-1.38)
0.07
(1.66)
Starts until 1994:4
Starts between 1995:1 and
1999:4
Maastricht's effort
4 G&C's IT disinflations
2
(5)
-1.77
(-0.41)
-0.30
(-1.99)
8.63
(0.37)
0.08
(2.15)
(6)
2.91
(0.77)
-0.35
(-2.16)
15.30
(0.71)
0.01
(0.33)
(7)
-1.70
(-0.47)
-0.23
(-1.50)
20.90
(0.97)
0.01
(0.34)
5.40
(1.98)
0.81
(0.30)
7.97
(3.03)
1.47
(0.54)
4.38
(1.70)
0.42
(0.16)
6.70
(2.49)
6.88
(3.16)
1.02
(0.41)
7.21
(2.97)
-6.89
(-3.51)
4 disinflations at least 2 quarters
after explicit IT adoption
14 explicit IT disinflations
Observations
Degrees of freedom
F statistic
(4)
2.68
(0.66)
-0.41
(-2.62)
4.26
(0.19)
0.07
(1.84)
-4.29
(-2.58)
34
5
6.29
0.48
0.39
36
4
5.27
0.42
0.35
-1.71
(-0.91)
0.17
(0.09)
36
4
3.83
0.38
0.30
R
2
Adj. R
Note: White (1980) heteroskedasticity-consistent t-statistics are in parentheses.
36
6
5.78
0.51
0.41
-1.13
(-0.63)
3.08
(1.76)
36
6
7.97
0.54
0.45
36
7
7.04
0.60
0.50
3.49
(2.48)
36
7
17.20
0.65
0.56
14