In theory how might inflation targeting affect output, Financial Management

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In theory how might inflation targeting affect output

The text Web site has data from the Ball- Sheridan study on inflation targeting. One variable is the standard deviation of output growth, which measures the instability of output.

a. In theory, how might inflation targeting affect output stability?

b. What do the Ball-Sheridan data say about this issue? Compare the standard deviation of output growth before and after the early 1990s in countries that adopted inflation targets and countries that didn't.

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