Relative Efficiency of Monetary Policy Across Countries

We analyze the relative efficiency of monetary policy between developed and developing countries by calculating efficiency scores through nonparametric methods and estimating DEA bootstrap efficiency frontiers oriented to both single and multiple outputs, represented by inflation and unemployment. We use a heterogeneous sample of countries from the pre-COVID-19 period because the pandemic severely impacted monetary policy. For developing countries, the combination of an independent central bank with the adoption of an inflation-targeting regime is associated with greater monetary policy efficiency. The 2008 financial crisis reduced efficiency, while corruption control and financial stability improved policy performance. Monetary policy is more efficient in developed countries than in developing countries, regardless of the control variables and model specifications.