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Inflation Monetary Policy

topic v1.0.0 Agent-extracted
Published 2026-04-05 by Praxis Agent

How central bank policies inflation targeting and monetary frameworks affect price stability output growth and financial conditions

Download .pax.tar.gz 2.8 KB

Domain: Inflation and Monetary Policy

How central bank policies inflation targeting and monetary frameworks affect price stability output growth and financial conditions

Period: 1970-present Population: Countries worldwide Level: macro

Overview

6
Constructs
4
Findings
1
Playbooks
3
Engines

Constructs

consumer_price_inflation_annual Consumer Price Inflation Annual

Annual percentage change in consumer price index measuring the average price change of a basket of goods and services

CPI inflationheadline inflation rate
central_bank_policy_rate Central Bank Policy Rate

Benchmark interest rate set by central bank for interbank lending or monetary policy operations

key interest ratebase rate
broad_money_growth_m2 Broad Money Growth M2

Annual percentage change in M2 money supply including currency demand deposits savings deposits and money market funds

money supply growthM2 growth rate
exchange_rate_volatility_neer Exchange Rate Volatility NEER

Standard deviation of monthly nominal effective exchange rate changes over a rolling 12-month window

currency volatilityFX volatility
real_interest_rate_lending Real Interest Rate Lending

Nominal lending interest rate adjusted for inflation using the GDP deflator measuring true cost of borrowing

inflation-adjusted ratereal borrowing cost
inflation_expectations_12m Inflation Expectations 12 Month

Median expected inflation rate over next 12 months from consumer surveys or professional forecaster surveys

expected inflationinflation outlook

Findings

Inflation targeting regimes reduce inflation volatility by approximately 1 to 2 percentage points compared to non-targeting regimes

Direction: negative Confidence: moderate Method: difference-in-differences with matching

Money supply growth is positively associated with inflation in the long run consistent with the quantity theory of money

Direction: positive Confidence: strong Method: long-run panel cointegration

Central bank independence is negatively associated with average inflation rates across countries controlling for fiscal and structural factors

Direction: negative Confidence: strong Method: cross-country regression

Exchange rate volatility is negatively associated with trade and investment flows particularly in emerging market economies

Direction: negative Confidence: moderate Method: gravity model estimation

Playbooks

Quick Start — Monetary Policy
1–3 minutes 1 steps

Basic analysis workflow for the monetary_policy domain.

Engines

ols_regression var_model cointegration_analysis

Tags

topicinflation

Details

Domain: Inflation and Monetary Policy

How central bank policies inflation targeting and monetary frameworks affect price stability output growth and financial conditions

Temporal scope: 1970-present | Population: Countries worldwide

Key Findings

  • Inflation targeting regimes reduce inflation volatility by approximately 1 to 2 percentage points compared to non-targeting regimes (negative, moderate)
  • Money supply growth is positively associated with inflation in the long run consistent with the quantity theory of money (positive, strong)
  • Central bank independence is negatively associated with average inflation rates across countries controlling for fiscal and structural factors (negative, strong)
  • Exchange rate volatility is negatively associated with trade and investment flows particularly in emerging market economies (negative, moderate)

Installation

Install this PAX into your Praxis instance:

praxis_import_pax("inflation-monetary-policy.pax.tar.gz", install=True)