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|Title:||Inflation targeting and inflation persistence|
|Keywords:||Taylor Rule, Inflation targeting, Phillips Curve, Inflation persistence.|
|Citation:||Economics and Finance Working papers, Brunel University, 02-12|
|Abstract:||This paper argues that the adoption of an inflation target reduces the persistence of inflation. We develop the theoretical literature on inflation persistence by introducing a Taylor rule for monetary policy into a model of persistence and showing that inflation targets reduce inflation persistence. We investigate changes in the time series properties of inflation in seven countries that introduced inflation targets in the late 1980s or early 1990s. We find that the persistence of inflation is greatly reduced or eliminated following the introduction of inflation targets.|
|Appears in Collections:||Economics and Finance|
Dept of Economics and Finance Research Papers
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