We study a model with repeated moral hazard where financial contracts are not fully indexed to inflation because … indexed to inflation and, as a result, their investment is more sensitive to nominal price shocks. We also find that the … inflation uncertainty are less vulnerable to a price shock of a given magnitude. The micro predictions of the model are tested …

disclosure of information affects the degree of uncertainty about central bank objectives. Actual inflation uncertainty is …The openness of central bank decision making has recently received new attention in the literature. It has been argued … major macroeconomic players with the central bank. In the Paper I make a distinction between (i) uncertainty about the …

, future inflation rates, and future currency depreciation rates. They separate market expectations for the short, medium and …

inflation and real interest rates in Germany, using monthly data from the first quarter of 1967. The central results are two …-fold. First, the interest rate spreads considered contain considerable information about future changes in inflation, but no …- and two-year rates, for instance) appears to be the most informative for future inflation. These results are similar to …

Survey data on household expectations of inflation are routinely used in economic analysis, yet it is not clear to what … recovering households' implicit expectations of inflation from their consumption expenditures. We show that these implicit … expectations have predictive power for CPI inflation. They are better predictors of CPI inflation than survey responses, except for …

Forward interest rates have become popular indicators of inflation expectations. The usefulness of this indicator … depends on the relative volatility and the correlation of inflation expectations and expected real interest rates. This paper … expected real interest rate add to the inflation expectations is balanced by a tendency for expected real interest rates and …

how central bank preferences (and thereby monetary policy) affect the relation between nominal interest rates, inflation … expectations, and real interest rates. The benchmark parameters, including the Federal Reserve Bank’s loss function parameters, are … estimated by maximum likelihood on quarterly US data. The policy experiments include stronger inflation targeting, more active …

central bank reputation and transparency. Monetary policy alternates between periods of active inflation stabilization and … periods during which the emphasis on inflation stabilization is reduced. When the central bank engages in only short … deviations from active monetary policy, inflation expectations remain anchored and the model captures the monetary approach …

A simple test of inflation target credibility is constructed by subtracting the maximum and minimum inflation rates … consistent with the inflation targets from the yields to maturity on nominal bonds. This results in a target-consistent range of … absolute credibility and credibility in expectation, are distinguished. The credibility of inflation targets of Canada, New …

framework prevalent in LICs drastically reduces the role of securities markets and increases the cost of bank lending to private … properly, the traditional monetary transmission channels (interest rate, bank lending, and asset price) are impaired. The … exchange rate channel, on the other hand, tends to be undermined by central bank intervention in the foreign exchange market …