Inflation targets and inflation expectations: some evidence from the recent oil shocks

Jason Tjosvold and Bharat Trehan ()

FRBSF Economic Letter, 2006, issue sep1

Abstract: A great deal of recent research has pointed out the benefits of adopting inflation targets, emphasizing, in particular, their role in helping to stabilize inflation expectations. These arguments suggest that inflation expectations in countries that target inflation should react differently to the recent oil price shocks than expectations in countries that do not target inflation. We examine whether this is indeed the case by comparing the recent behavior of inflation expectations in the U.S. - which does not have an explicit inflation target - with the behavior of inflation expectations in Canada and the U.K., which do.

Keywords: Inflation; (Finance) (search for similar items in EconPapers)
Date: 2006
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