Inflation and reproduction: the impact of inflation targeting on fertility in emerging economies

The decline in global birth rates has become a major concern for policymakers and researchers, with fertility rates in many countries remaining significantly below replacement levels. This study explores the relationship between inflation targeting (IT) and fertility rates in emerging countries. IT aims to ensure price stability by managing inflation rates and shaping public expectations, potentially creating a stable economic environment conducive to higher fertility rates. Using fixed-effect regression models with difference-in-differences (DID) methods, we find that countries adopting IT experience a smaller reduction in fertility rates compared to non-adopters. These findings suggest that IT not only achieves its primary goal of price stability but also supports higher fertility rates by mitigating economic uncertainties. This study is among the first to examine the effect of IT on fertility rates, providing empirical evidence that IT can be a strategic tool for addressing demographic challenges. The results offer valuable insights for policymakers in emerging economies, demonstrating that effective monetary policy frameworks like IT can have broader socio-economic benefits beyond price stability.