Changes in the Federal Reserve's Inflation Target: Causes and Consequences / Peter N. Ireland.

Format:

Book

Author/Creator:

Ireland, Peter N.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w12492.

NBER working paper series no. w12492

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Changes in the Federal Reserve's Inflation Target

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2006.

Summary:

This paper estimates a New Keynesian model to draw inferences about the behavior of the Federal Reserve's unobserved inflation target. The results indicate that the target rose from 1 1/4 percent in 1959 to over 8 percent in the mid-to-late 1970s before falling back below 2 1/2 percent in 2004. The results also provide some support for the hypothesis that over the entire postwar period, Federal Reserve policy has systematically translated short-run price pressures set off by supply-side shocks into more persistent movements in inflation itself, although considerable uncertainty remains about the true source of shifts in the inflation target.

Notes:

Print version record

August 2006.