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dc.contributor.authorBranch, William A.
dc.contributor.authorEvans, George W.
dc.identifier.citationBranch , W A & Evans , G W 2017 , ' Unstable inflation targets ' , Journal of Money, Credit and Banking , vol. 49 , no. 4 , pp. 767-806 .
dc.identifier.otherPURE: 244544273
dc.identifier.otherPURE UUID: 153ff2e9-fb20-4085-82dc-c28624aee91d
dc.identifier.otherScopus: 85019428889
dc.identifier.otherWOS: 000404098800007
dc.descriptionFinancial support from National Science Foundation Grant no. SES-1025011 is gratefully acknowledged.en
dc.description.abstractThis paper studies long-run inflation targets and stability in an imperfect information environment. When central banks set an inflation target that is not fully communicated, agents draw inferences about inflation from recent data and remain alert to structural change in their econometric model by forming expectations from a forecasting model that is estimated via discounted least squares. Inflation targets can lead agents' beliefs to depart from rational expectations through two channels. First, implementing a higher inflation target can lead to overshooting of the target. Second, there can be nearly self-fulfilling inflation, disinflation, or deflation that arises as an endogenous response to shocks. Policy implications for implementing a higher target without deanchoring expectations are discussed.
dc.relation.ispartofJournal of Money, Credit and Bankingen
dc.rights© 2017 The Ohio State University. This work has been made available online in accordance with the publisher’s policies. This is the author created, accepted version manuscript following peer review and may differ slightly from the final published version. The final published version of this work is available at:
dc.subjectInflation targeten
dc.subjectMonetary policyen
dc.subjectAdaptive learningen
dc.subjectHB Economic Theoryen
dc.subjectHG Financeen
dc.titleUnstable inflation targetsen
dc.typeJournal articleen
dc.contributor.institutionUniversity of St Andrews.School of Economics and Financeen
dc.description.statusPeer revieweden

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