Inflation targeting: an indirect approach to assess the direct impact

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dc.citation.epage1368en_US
dc.citation.issueNumber7en_US
dc.citation.spage1357en_US
dc.citation.volumeNumber29en_US
dc.contributor.authorYigit, T. M.en_US
dc.date.accessioned2016-02-08T09:56:21Z
dc.date.available2016-02-08T09:56:21Z
dc.date.issued2010en_US
dc.departmentDepartment of Economicsen_US
dc.description.abstractIt is quite difficult to assess the benefits of inflation targeting (IT) since its immediate effect will be on inflation expectations, an unobserved variable. Due to lack of comprehensive data on inflation expectations, most studies so far concentrated on the impact of IT either on observable variables like output, unemployment, and inflation or compared post-IT surveys of IT countries with non-IT countries. In our study, we focus on a yet unanswered question, i.e., how the expectations change with the adoption of IT. We suggest that heterogeneous inflation expectations lead to long memory in actual inflation, and IT, if successful, should decrease this persistence by concentrating the public's expectations toward the announced target. Empirical results confirm our hypothesis with a reduction in inflation memory after the adoption of IT in almost all eight developed countries in our sample. © 2010 Elsevier Ltd.en_US
dc.description.provenanceMade available in DSpace on 2016-02-08T09:56:21Z (GMT). No. of bitstreams: 1 bilkent-research-paper.pdf: 70227 bytes, checksum: 26e812c6f5156f83f0e77b261a471b5a (MD5) Previous issue date: 2010en
dc.identifier.doi10.1016/j.jimonfin.2010.05.004en_US
dc.identifier.eissn1873-0639
dc.identifier.issn0261-5606
dc.identifier.urihttp://hdl.handle.net/11693/22162
dc.language.isoEnglishen_US
dc.publisherPergamon Pressen_US
dc.relation.isversionofhttp://dx.doi.org/10.1016/j.jimonfin.2010.05.004en_US
dc.source.titleJournal of International Money and Financeen_US
dc.subjectAggregationen_US
dc.subjectHeterogeneous expectationsen_US
dc.subjectInflation targetingen_US
dc.subjectLong memory persistenceen_US
dc.titleInflation targeting: an indirect approach to assess the direct impacten_US
dc.typeArticleen_US

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