Inflation Targeting And Private Sector Forecasts

Author : Stephen G. Cecchetti
Publisher : DIANE Publishing
Page : 29 pages
File Size : 55,7 Mb
Release : 2010-10
Category : Business & Economics
ISBN : 9781437934328

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Inflation Targeting and Private Sector Forecasts by Stephen G. Cecchetti Pdf

Transparency is one of the biggest innovations in central bank policy of the past quarter century. Modern central bankers believe that they should be as clear about their objectives and actions as possible. However, is greater transparency always beneficial? This report studies the degree to which increased info. about monetary policy might lead to individuals coordinating their forecasts. The authors estimate a series of simple models to measure the impact of inflation targeting on the dispersion of private sector forecasts of inflation. Using a panel data set that includes 15 countries over 20 years they find no convincing evidence that adopting an inflation targeting regime leads to a reduction in the dispersion of private sector forecasts of inflation.

Author : Christopher W. Crowe
Publisher : International Monetary Fund
Page : 36 pages
File Size : 45,5 Mb
Release : 2006-12
Category : Business & Economics
ISBN : UCSD:31822035390590

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Testing the Transparency Benefits of Inflation Targeting by Christopher W. Crowe Pdf

I test whether inflation targeting (IT) enhances transparency using inflation forecast data for 11 IT adoption countries. IT adoption promotes convergence in forecast errors, suggesting that it enhances transparency. This effect is robust to dropping observations, is strengthened by using instrumental variable estimation to eliminate mean-reversion, and is absent in placebo regressions (where IT adoption is shifted by a year). This result supports Morris and Shin's (2002) contention that better public information is most beneficial for forecasters with bad private information. However, it does not support their hypothesis that better public information could make private forecasts less accurate.

Author : David Cobham,Øyvind Eitrheim,Stefan Gerlach,Jan F. Qvigstad
Publisher : Cambridge University Press
Page : 468 pages
File Size : 45,5 Mb
Release : 2010-09-16
Category : Business & Economics
ISBN : 9781139491259

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Twenty Years of Inflation Targeting by David Cobham,Øyvind Eitrheim,Stefan Gerlach,Jan F. Qvigstad Pdf

There is now a remarkably strong consensus among academics and professional economists that central banks should adopt explicit inflation targets and that all key monetary policy decisions, especially those concerning interest rates, should be made with a view to ensuring that these targets are achieved. This book provides a comprehensive review of the experience of inflation targeting since its introduction in New Zealand in 1989 and looks in detail at what we can learn from the past twenty years and what challenges we may face in the future. Written by a distinguished team of academics and professional economists from central banks around the world, the book covers a wide range of issues including many that have arisen as a result of the recent financial crisis. It should be read by anyone concerned with better understanding inflation targeting and its past, present and future role within monetary policy.

Author : Kevin Clinton,Charles Freedman,Michel Juillard,Mr.Ondrej Kamenik,Mr.Douglas Laxton,Hou Wang
Publisher : International Monetary Fund
Page : 56 pages
File Size : 40,8 Mb
Release : 2015-06-24
Category : Business & Economics
ISBN : 9781513557656

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Inflation-Forecast Targeting by Kevin Clinton,Charles Freedman,Michel Juillard,Mr.Ondrej Kamenik,Mr.Douglas Laxton,Hou Wang Pdf

Many central banks in emerging and advanced economies have adopted an inflation-forecast targeting (IFT) approach to monetary policy, in order to successfully establish a stable, low-inflation environment. To support policy making, each has developed a structured system of forecasting and policy analysis appropriate to its needs. A common component is a model-based forecast with an endogenous policy interest rate path. The approach is characterized, among other things, by transparent communications—some IFT central banks go so far as to publish their policy interest rate projection. Some elements of this regime, although a work still in progress, are worthy of consideration by central banks that have not yet officially adopted full-fledged inflation targeting.

Author : Frederic S. Mishkin
Publisher : Unknown
Page : 596 pages
File Size : 40,6 Mb
Release : 2007
Category : Anti-inflationary policies
ISBN : UCSD:31822035491067

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Monetary Policy Under Inflation Targeting by Frederic S. Mishkin Pdf

Author : Benjamin Viertel
Publisher : Diplomica Verlag
Page : 89 pages
File Size : 49,8 Mb
Release : 2009-08
Category : Business & Economics
ISBN : 9783836677905

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Inflation Targeting in the United Kingdom by Benjamin Viertel Pdf

Especially since the operational introduction as central bank monetary policy framework in the early 1990s in New Zealand, the United Kingdom (UK), Canada and Sweden, inflation targeting has gained both empirical and theoretical relevance as a monetary policy strategy. In this paper I relate to inflation targeting theory and its framework in the UK. For that purpose the author first regards the development of inflation targeting in respect to other monetary policy strategies. He answers the question what the actual target variable is and why one would want to have inflation being low and stable. Then there is some complexity because the development of inflation targeting has to be viewed in relation to paradigmatic debates between Monetarist and New-Keynesian insights. He present the two fundamental views of how an inflation targeting framework should be modelled. By stating some equations from basic theoretical literature, he gives an overview about the different characteristics of that monetary policy strategy and how there is still controversy about the way of modelling. One chapter is concerned with the operational framework in the UK, including statements to historical developments at the Bank of England. The present monetary policy framework will be reviewed in detail relating to the Bank's publication policy and the inflation forecasting process. The Bank of England's model of the transmission mechanism is reviewed. This includes the interest rate setting process, the role of money and the relationship between inflation and inflation expectations. Finally, he discusses some economic effects that changed the British economy since the introduction of inflation targeting.

Author : Man-Keung Tang,Mr.Xiangrong Yu
Publisher : International Monetary Fund
Page : 34 pages
File Size : 44,8 Mb
Release : 2011-08-01
Category : Business & Economics
ISBN : 9781463902193

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Communication of Central Bank Thinking and Inflation Dynamics by Man-Keung Tang,Mr.Xiangrong Yu Pdf

This paper studies the role of central bank communication of its economic assessment in shaping inflation dynamics. Imperfect information about the central bank's assessment - or the basis for monetary policy decisions - could complicate the private sector's learning about its policy response function. We show how clear central bank communication, which facilitates agents' understanding of policy reasoning, could bring about less volatile inflation and interest rate dynamics, and afford the authorities with greater policy flexibility. We then estimate a simple monetary model to fit the Mexican economy, and use the suggested paramters to illustrate the model's quantitative implications in scenarios where the timing, nature and persistence of shocks are uncertain.

Author : Ben S. Bernanke,Michael Woodford
Publisher : University of Chicago Press
Page : 469 pages
File Size : 52,9 Mb
Release : 2007-11-01
Category : Business & Economics
ISBN : 9780226044736

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The Inflation-Targeting Debate by Ben S. Bernanke,Michael Woodford Pdf

Over the past fifteen years, a significant number of industrialized and middle-income countries have adopted inflation targeting as a framework for monetary policymaking. As the name suggests, in such inflation-targeting regimes, the central bank is responsible for achieving a publicly announced target for the inflation rate. While the objective of controlling inflation enjoys wide support among both academic experts and policymakers, and while the countries that have followed this model have generally experienced good macroeconomic outcomes, many important questions about inflation targeting remain. In Inflation Targeting, a distinguished group of contributors explores the many underexamined dimensions of inflation targeting—its potential, its successes, and its limitations—from both a theoretical and an empirical standpoint, and for both developed and emerging economies. The volume opens with a discussion of the optimal formulation of inflation-targeting policy and continues with a debate about the desirability of such a model for the United States. The concluding chapters discuss the special problems of inflation targeting in emerging markets, including the Czech Republic, Poland, and Hungary.

Author : Guy Debelle
Publisher : International Monetary Fund
Page : 40 pages
File Size : 46,7 Mb
Release : 1997-03
Category : Business & Economics
ISBN : UCSD:31822023564065

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Inflation Targeting in Practice by Guy Debelle Pdf

In recent years, an inflation targeting framework for monetary policy has been adopted in a number of industrial countries. This paper discusses the practical issues that have arisen under the operation of the new framework, and highlights five features of the framework: the assignment of the target, the interaction with other policy goals, the definition of the target, accountability and the role of inflation forecasts. The economic performance of the inflation targeting countries thus far is summarized.

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 68 pages
File Size : 53,7 Mb
Release : 2007-06-25
Category : Business & Economics
ISBN : 9781451832884

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Romania by International Monetary Fund Pdf

This Selected Issues paper discusses Romania’s modeling monetary policy. A simple Forecasting and Policy Analysis System (FPAS) for Romania has been designed to help in the preparation of the IMF staff’s forecasts and policy assessments. A major advantage of this approach is that it allows the systematic and rapid analysis of different policy options. The model embodies the key principle that, in an inflation-targeting framework, the role of monetary policy is to provide an anchor for inflation and inflation expectations. The development and calibration of this model is an ongoing process.

Author : Christian H. Beddies
Publisher : International Monetary Fund
Page : 32 pages
File Size : 43,9 Mb
Release : 1999-03
Category : Business & Economics
ISBN : UCSD:31822025989625

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Monetary Policy and Public Finances by Christian H. Beddies Pdf

This paper considers the implications of the interplay between monetary and fiscal policies in an inflation-targeting framework. In this vein, the paper asks the following question: can an inflation target induce an independent central bank to provide the optimal rate of inflation, resulting in optimal seigniorage, taxes, public spending, and output? Does this also lead to optimal stabilization of aggregate supply shocks? The answer to the former is yes, while the answer to the latter is no, and our paper shows why.

Author : Vivek B. Arora
Publisher : International Monetary Fund
Page : 32 pages
File Size : 52,8 Mb
Release : 2007-05
Category : Business & Economics
ISBN : UCSD:31822034349373

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Monetary Policy Transparency and Financial Market Forecasts in South Africa by Vivek B. Arora Pdf

The transparency of monetary policy in South Africa has increased substantially since the end of the 1990s; but little empirical work has been done to examine the economic benefits of the increased transparency. This paper shows that, in recent years, South African private sector forecasters have become better able to forecast interest rates, are less surprised by reserve bank policy announcements, and are less diverse in the cross-sectional variety of their interest rate forecasts. In addition, there is some evidence that the accuracy of inflation forecasts has increased. The improvements in interest rate and inflation forecasts have exceeded those in real output forecasts, suggesting that increases in reserve bank transparency are likely to have played a role.

Author : Pär Österholm,Spencer Dale,Athanasios Orphanides
Publisher : International Monetary Fund
Page : 36 pages
File Size : 45,5 Mb
Release : 2008-03
Category : Business & Economics
ISBN : UCSD:31822036950053

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Imperfect Central Bank Communication - Information Versus Distraction by Pär Österholm,Spencer Dale,Athanasios Orphanides Pdf

Much of the information communicated by central banks is noisy or imperfect. This paper considers the potential benefits and limitations of central bank communications in a model of imperfect knowledge and learning. It is shown that the value of communicating imperfect information is ambiguous. There is a risk that the central bank can distract the public; this means that the central bank may prefer to focus its communication policies on the information it knows most about. Indeed, conveying more certain information may improve the public's understanding to the extent that it "crowds out" a role for communicating imperfect information.

Author : Peter J. N. Sinclair
Publisher : Routledge
Page : 402 pages
File Size : 52,8 Mb
Release : 2009-12-16
Category : Business & Economics
ISBN : 9781135179779

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Inflation Expectations by Peter J. N. Sinclair Pdf

Inflation is regarded by the many as a menace that damages business and can only make life worse for households. Keeping it low depends critically on ensuring that firms and workers expect it to be low. So expectations of inflation are a key influence on national economic welfare. This collection pulls together a galaxy of world experts (including Roy Batchelor, Richard Curtin and Staffan Linden) on inflation expectations to debate different aspects of the issues involved. The main focus of the volume is on likely inflation developments. A number of factors have led practitioners and academic observers of monetary policy to place increasing emphasis recently on inflation expectations. One is the spread of inflation targeting, invented in New Zealand over 15 years ago, but now encompassing many important economies including Brazil, Canada, Israel and Great Britain. Even more significantly, the European Central Bank, the Bank of Japan and the United States Federal Bank are the leading members of another group of monetary institutions all considering or implementing moves in the same direction. A second is the large reduction in actual inflation that has been observed in most countries over the past decade or so. These considerations underscore the critical – and largely underrecognized - importance of inflation expectations. They emphasize the importance of the issues, and the great need for a volume that offers a clear, systematic treatment of them. This book, under the steely editorship of Peter Sinclair, should prove very important for policy makers and monetary economists alike.

Author : Mark Gertler,Kenneth S. Rogoff
Publisher : MIT Press
Page : 436 pages
File Size : 46,7 Mb
Release : 2004
Category : Business & Economics
ISBN : 0262572214

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NBER Macroeconomics Annual 2003 by Mark Gertler,Kenneth S. Rogoff Pdf

The NBER Macroeconomics Annual presents pioneering work in macroeconomics by leading academic researchers to an audience of public policymakers and the academic community. Each commissioned paper is followed by comments and discussion. This year's edition provides a mix of cutting-edge research and policy analysis on such topics as productivity and information technology, the increase in wealth inequality, behavioral economics, and inflation.