The Changing Dynamics of Inflation |
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Authors: | Randall S Kroszner |
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Institution: | (1) Board of Governors, Federal Reserve System, Washington, DC 20551, USA |
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Abstract: | Inflation in the United States and elsewhere has become
lower and more stable over the past two decades. It is
likely that monetary policy has played an important role
in this change in inflation dynamics by creating expectations
of stability. This paper traces the evolution of the role
of expectations in thinking about inflation, the supporting
evidence over the past two decades, and role of central
banks in influencing expectations. Increased global integration
has magnified these effects. However, the importance
of factors other than monetary policy implies that
policymakers must consider a wide range of information
before acting. Moreover, expectations of inflation stability
cannot be taken for granted; and policymakers must be
vigilant against complacency.
JEL Classification E31, E58 |
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Keywords: | inflation Fed bank central FOMC |
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