We highlight important aspects and consequences of using inflation targets during disinflation. Our illustrative theoretical model suggests annual revisions to short run are larger when the target is undershot than when the target is overshot. We confirm the result using cross-country panel...

Globally, the majority of countries using inflation targets have done so when inflation was neither low nor stable. Many such countries have changed their target each year, and our empirical estimates support theoretical predictions that annual changes to the target are endogenous to outcomes....