Are inflation targets credible? A novel test

Aaron Mehrotra and James Yetman

Economics Letters, 2018, vol. 167, issue C, 67-70

Abstract: We propose a novel test of the credibility of inflation targets, using surveys of professional forecasters and a variant of the model of inflation expectations developed in Mehrotra and Yetman (2017). We find that inflation targets in most economies have been considered credible by professional forecasters, as the estimated anchor of inflation forecasts is close to the announced inflation target. Moreover, any deviations between the estimated anchor and the target tend to be short lived.

Keywords: Inflation targeting; Credibility; Inflation expectations (search for similar items in EconPapers)
JEL-codes: E31 E58 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:167:y:2018:i:c:p:67-70

DOI: 10.1016/j.econlet.2018.03.015

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