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Inflation Targeting and Communication: Should the Public Read Inflation Reports or Tea Leaves?

Ales Bulir (), Katerina Smidkova, Viktor Kotlán () and David Navratil ()

Working Papers from Czech National Bank, Research Department

Abstract: Inflation-targeting central banks have a respectable track record at explaining their policy actions and corresponding inflation outturns. Using a simple forward-looking policy rule and an assessment of inflation reports, we provide a new methodology for the empirical evaluation of consistency in central bank communication. We find that the three communication tools—inflation targets, inflation forecasts, and verbal assessments of inflation factors contained in quarterly inflation reports—provided a consistent message in five out of six observations in our 2000–05 sample of Chile, the Czech Republic, Hungary, Poland, Thailand, and Sweden.

Keywords: Emerging markets; forecasting; inflation targeting; monetary policy; transparency. (search for similar items in EconPapers)
JEL-codes: E31 E43 E47 E58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-for, nep-mac, nep-mon, nep-sea and nep-tra
Date: 2007-12
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Persistent link: https://EconPapers.repec.org/RePEc:cnb:wpaper:2007/14

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