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Inflation Targeting in Korea, Indonesia, Thailand, and the Philippines: The Impact on Business Cycle Synchronization between Each Country and the World

Discussion Papers


by INOUE Takeshi, TOYOSHIMA Yuki, and HAMORI Shigeyuki
March 2012


This paper is an overview of the results from a questionnaire survey and subsequent supplementary interviews of Iran’s large apparel firms This paper empirically analyzes whether and to what extent the adoption of inflation targeting (IT) in Korea, Indonesia, Thailand and the Philippines has affected their business cycle synchronization with the rest of the world. By employing the dynamic conditional correlation (DCC) model developed by Engle (2002), we find that IT in Asia has little effect on international business cycle synchronization and the effect is positive in some of the countries, if any. These findings basically seem to be consistent with the evidence from relevant literature.

Keywords: Asia, business cycle synchronization, DCC, inflation targeting
JEL classification: E52, E58, F42

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