June 2014 issue contents
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)