Changes in the Federal Reserve's Inflation Target: Causes and Consequences

Peter Ireland

No 12492, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper estimates a New Keynesian model to draw inferences about the behavior of the Federal Reserve's unobserved inflation target. The results indicate that the target rose from 1 1/4 percent in 1959 to over 8 percent in the mid-to-late 1970s before falling back below 2 1/2 percent in 2004. The results also provide some support for the hypothesis that over the entire postwar period, Federal Reserve policy has systematically translated short-run price pressures set off by supply-side shocks into more persistent movements in inflation itself, although considerable uncertainty remains about the true source of shifts in the inflation target.

JEL-codes: E31 E32 E52 (search for similar items in EconPapers)
Date: 2006-08
New Economics Papers: this item is included in nep-cba, nep-his, nep-knm, nep-mac and nep-mon
Note: ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Published as Peter N. Ireland, 2007. "Changes in the Federal Reserve's Inflation Target: Causes and Consequences," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(8), pages 1851-1882, December.

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Related works:
Journal Article: Changes in the Federal Reserve's Inflation Target: Causes and Consequences (2007)
Journal Article: Changes in the Federal Reserve's Inflation Target: Causes and Consequences (2007)
Working Paper: Changes in the Federal Reserve’s Inflation Target: Causes and Consequences (2005)
Working Paper: Changes in the Federal Reserve's inflation target: causes and consequences (2005)
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