A parsimonious model of shifting policy regimes can simultaneously capture expected and actual US inflation during 1969 …. Private sector learning about policymaker type leads to a reputation state variable. We use model inflation forecasting rules … to extract state variables from SPF inflation forecasts. US inflation is tracked by optimal policy without commitment …

more, and somewhat faster, with perfect credibility in the wake of the inflation surge post-COVID-19 …This paper studies the effectiveness of forward guidance when central banks have imperfect credibility. Exploiting … unique survey-based measures of expected inflation, output growth, and interest rates, we estimate a small-scale New …

The perceptions of a central bank's inflation aversion may reflect institutional structure or, more dynamically, the … for persistent variation in market perceptions of central bank inflation aversion. The first years of the European Central … the ECB during its first six years of operation significantly evolved, with a belief in its inflation aversion increasing …

price stability. The benefits of credibility (private inflation expectations coinciding with the inflation target) are … discussed. Credibility improves the tradeoff between inflation variability, output-gap variability and instrument variability … inflation (with base drift in the price level) and price-level stability (without such base drift) are compared, and a suitable …

people observe low inflation, they raise the possibility that the policymaker is committed to low inflation (type 1). This … equilibrium the policymaker of type 1 delivers surprisingly low inflation -- with corresponding costs to the economy -- over an … extended interval. The type 2 person mimics this outcome for awhile, but shift seventually to high inflation. This high …

In a discretionary regime the monetary authority can print more money and create more inflation than people expect. But …, although these inflation surprises can have some benefits, they cannot arise systematically in equilibrium when people … inflation shocks ex post, the equilibrium growth rates of money and prices turn out to be higher than otherwise. Therefore …

We present a simple long-run aggregate demand and supply framework for evaluating long-run inflation. The framework …-run inflation as well as transitions between steady states. We use the analysis to provide a fresh perspective on the forces that … drove global inflation downward over the past four decades. We argue that for inflation to remain low and stable in the …

This paper studies the implications of central bank credibility for long-run inflation and inflation dynamics. We … competitive firms. Inflation is driven by the interaction of lack of commitment and the economic environment. We show that long …-run inflation increases following an unanticipated permanent increase in the labor wedge or decrease in the elasticity of …

The rise, fall, and stabilization of US inflation between 1969 and 2005 is consistent with a model of shifting policy … sector learning about policymaker type. Using model-implied inflation forecasting rules to extract state variables from the … inflation forecasts in the Survey of Professional Forecasters, we provide evidence that policy regimes without commitment …