Inflation targets

  • Gaining Credibility for Inflation Targets

    Staff Working Paper 2001-11 James Yetman
    In this paper, I consider a simple model in which agents learn about the inflation target of a central bank over time by observing the policy instrument or inflation outcomes. Measuring credibility as the distance between the perceived target and the actual target, an increase in credibility is beneficial to the central bank because it brings the policy consistent with attaining the inflation target closer to that required to attain the output target.
    Content Type(s): Staff Research, Staff Working Papers Topic(s): Credibility, Inflation targets JEL Code(s): E, E5, E52

Follow the Bank