Impact of Monetary Policy Sustainability Indicators on Economic Growth in Transition to Inflation Targeting

Abstract

Foreign experience in the transition to inflation targeting has been studied empirically. The foreign experience shows that countries with inflation targeting regimes have not abandoned and have not returned to other alternative monetary regimes. This indicates that the inflation targeting regime has been successfully tested in practice. It should be noted that inflation targeting has led to new approaches to monetary policy targets. As a result, international economists and experts have started to research inflation targeting as a new path in the scientific arena. The aim of the study is the study is to investigate the influence of indicators of monetary policy stability of Uzbekistan on economic growth using various economic-mathematical models. In the paper was investigated the impact of Uzbekistan's monetary policy stability indicators on economic growth by using four criteria from the 4×2 matrix model in 2011–2020. Based on obtained results, the Phillips-Perron and extended Dickey-Fuller tests determine whether variables are stationary. The long-term correlation between the variables is checked using the Johansen cointegration test. The results show that increases in bank capital adequacy, loan portfolio, money supply, and lower inflation help maintain macroeconomic stability. However, the rising volume of bank deposits and foreign currency appreciation against Uzbek sum hurts economic growth. In addition, liquidity ratio, state gold and foreign exchange reserves are insignificant and do not affect economic growth.