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Title: Inflation Target Credibility: Do the Financial Markets Find the Targets Believable?
Authors: Taş, Bedri Kamil Onur
Peker, Mustafa Çağrı
Issue Date: Dec-2017
Publisher: Wiley
Source: Tas, B. K. O., & Peker, M. C. (2017). Inflation Target Credibility: Do the Financial Markets Find the Targets Believable?. Oxford Bulletin of Economics and Statistics, 79(6), 1125-1147.
Abstract: We investigate the credibility of inflation targeting (IT) central banks (CBs) by estimating perceived inflation targets of the financial markets. We calculate financial markets' beliefs about the inflation targets of 24 IT countries. Then, we analyse whether the financial markets' beliefs about inflation targets match the announced targets. We conclude that the perceived upper bound of the inflation target is significantly higher than the announced one in many countries. Additionally, the perceived target band is narrower and asymmetric around the mid-point of the target for most CBs. We examine the implications of these findings and find that IT CBs are more likely to miss their targets when the perceptions of the financial markets are higher than the announced IT targets. These results indicate that IT CBs should pay attention to the perceptions of the announced targets when implementing policy actions.
ISSN: 0305-9049
Appears in Collections:İktisat Bölümü / Department of Economics
Scopus İndeksli Yayınlar Koleksiyonu / Scopus Indexed Publications Collection
WoS İndeksli Yayınlar Koleksiyonu / WoS Indexed Publications Collection

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