  This paper surveys the empirical literature of inflation targeting. The main
findings from our review are the following: there is robust empirical evidence
that larger and more developed countries are more likely to adopt the IT
regime; the introduction of this regime is conditional on previous
disinflation, greater exchange rate flexibility, central bank independence, and
higher level of financial development; the empirical evidence has failed to
provide convincing evidence that IT itself may serve as an effective tool for
stabilizing inflation expectations and for reducing inflation persistence; the
empirical research focused on advanced economies has failed to provide
convincing evidence on the beneficial effects of IT on inflation performance,
while there is some evidence that the gains from the IT regime may have been
more prevalent in the emerging market economies; there is not convincing
evidence that IT is associated with either higher output growth or lower output
variability; the empirical research suggests that IT may have differential
effects on exchange-rate volatility in advanced economies versus EMEs; although
the empirical evidence on the impact of IT on fiscal policy is quite limited,
it supports the idea that IT indeed improves fiscal discipline; the empirical
support to the proposition that IT is associated with lower disinflation costs
seems to be rather weak. Therefore, the accumulated empirical literature
implies that IT does not produce superior macroeconomic benefits in comparison
with the alternative monetary strategies or, at most, they are quite modest.
