deviations of inflation from target, but not to monetary growth. This result is at odds with the Bundesbank´s claim that it … Bundesbank took its monetary targets seriously, but also responded to deviations of expected inflation and output growth from …

In this paper, I consider a simple model in which agents learn about the inflation target of a central bank over time … by observing the policy instrument or inflation outcomes. Measuring credibility as the distance between the perceived … consistent with attaining the inflation target closer to that required to attain the output target. In this model, the crucial …

regimes leads to more aggressive policy reactions with respect to inflation and the second lag of the real exchange rate; and …

We argue that inflation-targeting strategy in practice can be approximated with the interest rate responding to the … unchanged-interest-rate forecast of inflation. We develop a method to derive unchanged-interest-rate forecasts in forward … policy if the central bank attaches sufficient weight to inflation as opposed to output gap stabilization. The optimal …

summarised as follows. (1) Historically, inflation persistence appears to have been the exception, rather than the rule, with … inflation estimated to have been highly persistent only during the period between the floating of the pound, in June 1972, and … the introduction of inflation targeting, in October 1992. Under inflation targeting, it exhibits some slight negative …

. Under discretionary monetary policy the size of the inflation bias depends on the fiscal policy regime. Using the timeless … alternative fiscal policy rules, and inflation and output persistence reflects the economic data. With the deficit rules, the …

In the late 1960s and into the 1970s, the United States experienced a burst of inflation the origins of which seemed … have arrived at the erroneous conclusion that its output-inflation trade-off was better than is truly the case. This … equilibria and restore stability of inflation expectations. An implication of this is that the observed higher volatility of the …