The Evolution of Federal Reserve Credibility: 1978-1984
AbstractA random coefficients Kalman filter model of the response of commodity prices to weekly M1 announcements indicates a gradual evolution in the credibility of the Federal Reserve as an inflation fighter. The October 1979 announcement of a change in monetary policy aimed at reducing inflation did not result in an immediate increase in credibility, and the October 1982 announcement of a policy reversal did not diminish credibility. Credibility does vary with the underlying rate of inflation, which shows that markets pay attention to policy results not simply policy announcements. Copyright 1989 by MIT Press.
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Bibliographic InfoArticle provided by MIT Press in its journal Review of Economics & Statistics.
Volume (Year): 71 (1989)
Issue (Month): 3 (August)
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Other versions of this item:
- Hardouvelis, G.A. & Barnhart, S.W., 1989. "The Evolution Of Federal Reserve Credibility: 1978-1984," Papers fb-_88-16, Columbia - Graduate School of Business.
- Gikas A. Hardouvelis & Scott W. Barnhart, 1988. "The evolution of Federal Reserve credibility: 1978-1984," Research Paper 8809, Federal Reserve Bank of New York.
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- THORBECKE, Willem & Hanjiang ZHANG, 2008.
"Monetary Policy Surprises and Interest Rates: Choosing between the Inflation-Revelation and Excess Sensitivity Hypotheses,"
08031, Research Institute of Economy, Trade and Industry (RIETI).
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- Chan G. Huh & Kevin J. Lansing, 1997.
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- Chan G. Huh & Kevin J. Lansing, 1998. "Expectations, credibility, and disinflation in a small macroeconomic model," Working Papers in Applied Economic Theory 98-01, Federal Reserve Bank of San Francisco.
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