Alexandru Minea

Alexandru Minea (University of Auvergne, France)

mineaProject: Can inflation targeting promote institutional quality in developing countries?

Period: Mai 31st 2017 – June 13th 2017

Shot presentation: Institutional reforms are a key issue on the current research agenda in different fields. In economics, a rich literature focuses on the link between monetary institutional reforms and fiscal institutional reforms.

The study presented in this seminar aims at revisiting the link between monetary and fiscal reforms. The adoption of a more restrictive monetary regime, such as inflation targeting or appointing a more „conservative” central banker (i.e. which attached a higher importance to the inflation goal, with respect to the other potential goals), leads to a decrease of the inflation rate, and generates an important loss of government resources from seigniorage revenues. Particularly in developing countries, characterized on average by higher inflation rate compared to developed countries, this loss could be rather important, given that in these countries a relatively large share of government resources may come from seigniorage revenues. To compensate this loss, governments may launch fiscal reforms aimed at raising fiscal resources, including through resources dedicated to enhancing the quality of fiscal institutions, with the scope of increasing the degree of collecting of fiscal revenues.

Furthemore, this theoretical result is tested in a macroeconomic environment, using data for developing countries. Drawing upon modern econometric tools employed in the literature devoted to analyzing the effects of monetary reforms consisting of inflation targeting adoption, it is shown that the countries that adopted an inflation targeting monetary framework present, on average, better institutional features (capturing, mostly, the quality of fiscal institutions) compared with countries with comparable observable characteristics, but that did not adopt inflation targeting. This statistically significant difference, confirmed by a wide set of robustness tests, support the conclusion of the theoretical model previously developed.

A secondary direction of Dr. Minea`s visit within the ICUB is a seminar regarding academic writing and publishing strategies, intended to help both ICUB fellows and PhD students within the social sciences area. The main topics of this event will be: enhancing the quality of the article, choosing an academic journal, journal indexing and classifications, the process of being published (revisions and meeting journal specifications).

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