Establishing and Maintaining a Firm Nominal Anchor
by Andrew Levin
International Monetary Fund
A key practical challenge for monetary policy is to gauge
the extent to which the private sector perceives the central
bank’s nominal anchor as transparent and credible. In light
of that challenge, this commentary discusses some evidence
on the evolution of longer-term inflation expectations in three
advanced economies and then highlights several econometric
issues that are relevant in assessing whether a given central
bank has effectively been following a price-level targeting
regime or an inflation-targeting regime.
JEL Codes: E31, E42, E52.
Full article (PDF, 8 pages, 295 kb)