Inflation targeting on output growth: A pulse dummy analysis of dynamic macroeconomic panel data

•This study is a contribution on inflation targeting (IT) and output growth.•A pulse dummy analysis of dynamic macroeconomic panel data is used.•Three samples are used: advanced countries, developing countries and all countries.•The findings denote a positive constant effect on output after the adoption of IT.•The adoption of IT can imply gains in economic growth.

This study contributes to the empirical literature on inflation targeting (IT) and output growth through a combination of econometric models seeking the flexibility to capture the collateral effects of IT on economic growth and acknowledging the relationships among the countries in the models with macro panel data analysis. To this end, three samples are used: advanced countries, developing countries and all countries. An important result of the many estimations in this study is that there is a positive constant effect on output after the adoption of IT, especially for developing countries. Therefore, the findings denote that the adoption of IT implies gains in economic growth or at least non-sluggish economic growth.