The Effect of Inflation-Targeting Policy on Economic Growth in AEC Countries

Abstract

Bayesian econometrics is very useful for subjective probability judgments of risk insecurity. This examination was inspired by the key issue for the investigation of inflation-targeting policy in Asian Economic Community (AEC) countries under the concept of the inflation-targeting framework of effective inflation policy for the economic growth of each of the AEC countries. Further, it was aimed at analyzing time series data of the annual inflation target rate and the gross domestic product growth rate from 1960 to 2015. Three key distinctive stages of analysis reveal enhancement prospects in the panel model. The estimation result provided by the Bayes factor approach can be used as guidance on how information on comparative monetary policy is under the control of price stability. The appropriate relationship is best employed across important inflation-targeting policy, setting the monetary policy to stimulate long-term economic growth in Thailand, Singapore, Malaysia, and Indonesia respectively, but not in the Philippines economy.