Does the Fed Control Trend Inflation?

William Crowder

Annals of Economics and Finance, 2020, vol. 21, issue 2, 241-261

Abstract: The inability of central banks around the globe to increase the rate of inflation within their economies is becoming a serious concern for policy makers. In response to the financial crisis central banks expanded their balance sheets to unprecedented levels and the impact on inflation has been negligible. The failure of standard policy responses to ignite inflation has led several to call for alternative strategies like the Neo-Fisher hypothesis. We test for the necessary causal linkages using a cointegrated structural vector error correction model to determine how much control the Federal Reserve has over the trend rate of inflation in the U.S.

Keywords: Neo-Fisher Hypothesis; Long-Run Causality (search for similar items in EconPapers)
JEL-codes: C32 E31 E42 (search for similar items in EconPapers)
Date: 2020
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