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Inflation targeting and the anchoring of inflation expectations: cross-country evidence from consensus forecasts


  • Davis, J. Scott

    () (Federal Reserve Bank of Dallas)

  • Presno, Ignacio

    (Federal Reserve Bank of Boston)


Using survey data of inflation expectations across a 36 developed and developing countries, this paper examines whether the adoption of inflation targeting has helped to anchor inflation expectations. We examine the response of inflation expectations following a shock to inflation, inflation expectations, and oil prices. For the 13 countries that adopted inflation targeting midway through the time period used in this study, there is a significant difference in the responses between the earlier and the later subperiods. A shock leads to a positive, significant, and persistent increase inflation expectations in the earlier, pre-targeting subperiod, but the same response is much less significant and persistent in the later, posttargeting subperiod. For the control group of 23 countries that did not adopt inflation targeting during this time period, there is no difference between responses in the earlier and the later sub-periods.

Suggested Citation

  • Davis, J. Scott & Presno, Ignacio, 2014. "Inflation targeting and the anchoring of inflation expectations: cross-country evidence from consensus forecasts," Globalization and Monetary Policy Institute Working Paper 174, Federal Reserve Bank of Dallas.
  • Handle: RePEc:fip:feddgw:174 DOI: 10.24149/gwp174

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    References listed on IDEAS

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    Cited by:

    1. repec:taf:apeclt:v:24:y:2017:i:20:p:1481-1485 is not listed on IDEAS
    2. Michael Ehrmann, 2015. "Targeting Inflation from Below: How Do Inflation Expectations Behave?," International Journal of Central Banking, International Journal of Central Banking, vol. 11(4), pages 213-249, September.
    3. Luca A Ricci & Wei Shi, 2016. "Trilemma or Dilemma; Inspecting the Heterogeneous Response of Local Currency Interest Rates to Foreign Rates," IMF Working Papers 16/75, International Monetary Fund.
    4. Benjamin Wong, 2015. "Do Inflation Expectations Propagate the Inflationary Impact of Real Oil Price Shocks?: Evidence from the Michigan Survey," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(8), pages 1673-1689, December.
    5. Andrea Fracasso & Rocco Probo, 2017. "When did inflation expectations in the Euro area de-anchor?," Applied Economics Letters, Taylor & Francis Journals, vol. 24(20), pages 1481-1485, November.

    More about this item


    price levels; inflation; deflation; monetary policy;

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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