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dc.contributor.authorGürkaynak, R. S.en_US
dc.contributor.authorLevin, A.en_US
dc.contributor.authorSwanson, E.en_US
dc.date.accessioned2016-02-08T09:55:28Z
dc.date.available2016-02-08T09:55:28Z
dc.date.issued2010en_US
dc.identifier.issn1542-4766
dc.identifier.urihttp://hdl.handle.net/11693/22094
dc.description.abstractWe investigate the extent to which inflation expectations have been more firmly anchored in the United Kingdom-a country with an explicit inflation target-than in the United States-a country with no such target-using the difference between far-ahead forward rates on nominal and inflation-indexed bonds as a measure of compensation for expected inflation and inflation risk at long horizons. We show that far-ahead forward inflation compensation in the U.S. exhibits substantial volatility, especially at low frequencies, and displays a highly significant degree of sensitivity to economic news. Similar patterns are evident in the UK prior to 1997, when the Bank of England was not independent, but have been strikingly absent since the Bank of England gained independence in 1997. Our findings are further supported by comparisons of dispersion in longer-run inflation expectations of professional forecasters and by evidence from Sweden, another inflation-targeting country with a relatively long history of inflation-indexed bonds. Our results support the view that an explicit and credible inflation target helps to anchor the private sector's views regarding the distribution of long-run inflation outcomes. © 2010 by the European Economic Association.en_US
dc.language.isoEnglishen_US
dc.source.titleJournal of the European Economic Associationen_US
dc.relation.isversionofhttps://doi.org/10.1111/j.1542-4774.2010.tb00553.xen_US
dc.titleDoes inflation targeting anchor long-run inflation expectations? Evidence from the U.S., UK, and Swedenen_US
dc.typeArticleen_US
dc.departmentDepartment of Economicsen_US
dc.citation.spage1208en_US
dc.citation.epage1242en_US
dc.citation.volumeNumber8en_US
dc.citation.issueNumber6en_US
dc.identifier.doi10.1111/j.1542-4774.2010.tb00553.xen_US
dc.publisherOxford University Pressen_US
dc.identifier.eissn1542-4774


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