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Keywords:Inflation target 

Working Paper
Raising an Inflation Target : The Japanese Experience with Abenomics

This paper draws from Japan?s recent monetary experiment to examine the effects of an increase in the inflation target during a liquidity trap. We review Japanese data and examine through a VAR model how macroeconomic variables respond to an identified inflation target shock. We apply these findings to calibrate the effect of a shock to the inflation target in a new-Keynesian DSGE model of the Japanese economy. We argue that imperfect observability of the inflation target and a separate exchange rate shock are needed to successfully account for the behavior of nominal and real variables in ...
International Finance Discussion Papers , Paper 1168

Journal Article
Has the Anchoring of Inflation Expectations Changed in the United States during the Past Decade?

The financial crisis and Great Recession led to dramatic shifts in U.S. monetary policy over the past decade, with potential implications for inflation expectations. Prior to the crisis, inflation expectations were well anchored. But during the crisis and recovery, the Federal Reserve turned to new policies such as large-scale asset purchases (LSAPs). In addition, the Federal Open Market Committee adopted a formal inflation target in 2012, with the stated goal of keeping longer-term inflation expectations stable. Did inflation expectations remain anchored during this period of unconventional ...
Economic Review , Issue Q I , Pages 31-58

Working Paper
Optimal monetary policy regime switches

Given regime switches in the economy?s growth rate, optimal monetary policy rules may respond by switching policy parameters. These optimized parameters differ across regimes and from the optimal choice under fixed regimes, particularly in the inflation target and interest rate inertia. Optimal switching rules produce welfare gains relative to constant rules, with switches in the implicit real interest rate used for policy and the degree of interest rate inertia producing the largest gains. However, gains from switching rules decrease if the monetary authority trades-off the probability of ...
Research Working Paper , Paper RWP 16-7

Working Paper
The Optimal Inflation Rate with Discount Factor Heterogeneity

This paper shows that deviations from long-run price stability are optimal in the presence of price stickiness whenever profit and utility flows are discounted at a different rate. In that case, a monetary authority acting under commitment will choose a path for the inflation rate that ends with a non-zero value. Such a property is relevant in a wide range of macroeconomic environments. I first illustrate this by studying optimal monetary policy in a New Keynesian model with a perpetual youth structure. In this setting, profit flows are discounted more heavily than utility flows and the ...
Finance and Economics Discussion Series , Paper 2018-086

Journal Article
Did Communicating a Numerical Inflation Target Anchor U.S. Inflation Expectations?

Macro Bulletin

Speech
An Economic Outlook at the Philadelphia Club: a speech at the Bond Club of Philadelphia, CFA Society of Philadelphia, and Philadelphia Council for Business Economics, May 23, 2016

President Patrick T. Harker presents his economic outlook at an event sponsored by the Bond Club of Philadelphia, the CFA Society of Philadelphia, and the Philadelphia Council for Business Economics. He also offers his views on monetary policy.
Speech , Paper 121

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