Monetary Policy Actions and Long-Run Inflation Expectations

37 Pages Posted: 15 Jan 2009

See all articles by Michael T. Kiley

Michael T. Kiley

Board of Governors of the Federal Reserve System

Date Written: January 1, 2008

Abstract

The degree to which inflation expectations are anchored at long horizons is important for many issues in macroeconomics and finance. There has been little research examining observable measures of long-run inflation expectations. We investigate the evolution of survey measures of long-run inflation expectations in the United States. Our analysis emphasizes the role of a time-varying inflation objective of monetary policymakers. This focus makes monetary policy actions a key determinant of long-run inflation expectations. Our results have important implications for work on inflation dynamics, monetary policy rules, the costs of disinflation, and the term structure of interest rates.

Keywords: Inflation objective, learning

JEL Classification: E3, E4

Suggested Citation

Kiley, Michael T., Monetary Policy Actions and Long-Run Inflation Expectations (January 1, 2008). FEDS Working Paper No. 2008-03. Available at SSRN: https://ssrn.com/abstract=1327080 or http://dx.doi.org/10.2139/ssrn.1327080

Michael T. Kiley (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th and C Streets, NW
Washington, DC 20551
United States
202-452-2448 (Phone)
202-452-5296 (Fax)

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