scholarly journals A NOTE ON THE IMPACT OF NEWS ON US HOUSEHOLD INFLATION EXPECTATIONS

2018 ◽  
Vol 24 (4) ◽  
pp. 995-1015 ◽  
Author(s):  
Ben Zhe Wang ◽  
Jeffrey Sheen ◽  
Stefan Trück ◽  
Shih-Kang Chao ◽  
Wolfgang Karl Härdle
Keyword(s):  
Monetary Policy ◽  
Lower Bound ◽  
Government Policy ◽  
Personal Characteristics ◽  
Inflation Expectations ◽  
Consumer Sentiment ◽  
Policy Effectiveness ◽  
Unemployment Rates ◽  
Asymmetric Impact ◽  
The Impact

Monthly disaggregated US data from 1978 to 2016 reveal that exposure to news on inflation and monetary policy helps to explain inflation expectations. This remains true when controlling for household personal characteristics, perceptions of government policy effectiveness, expectations of future interest and unemployment rates, and sentiment. We find an asymmetric impact of news on inflation and monetary policy after 1983, with news on rising inflation and easier monetary policy having a stronger effect in comparison to news on lowering inflation and tightening monetary policy. Our results indicate the impact on inflation expectations of monetary policy news manifested through consumer sentiment during the lower bound period.

scholarly journals Inflation Expectations and Readiness to Spend: Cross-Sectional Evidence

2015 ◽  
Vol 7 (1) ◽  
pp. 1-35 ◽  
Author(s):  
Rüdiger Bachmann ◽  
Tim O. Berg ◽  
Eric R. Sims
Keyword(s):  
Lower Bound ◽  
Inflation Expectations ◽  
Zero Lower Bound ◽  
Cross Sectional ◽  
Percentage Point Increase ◽  
Expected Inflation ◽  
Percentage Points ◽  
Point Increase ◽  
The Impact ◽  
The Relationship

There have been suggestions for monetary policy to engineer higher inflation expectations to stimulate spending. We examine the relationship between expected inflation and spending attitudes using the microdata from the Michigan Survey of Consumers. The impact of higher inflation expectations on the reported readiness to spend on durables is generally small, outside the zero lower bound, often statistically insignificant, and inside of it typically significantly negative. In our baseline specification, a one percentage point increase in expected inflation during the recent zero lower bound period reduces households' probability of having a positive attitude towards spending by about 0.5 percentage points. (JEL D12, D84, E21, E31, E52)

scholarly journals Business cycle synchronization: is it affected by inflation targeting credibility?

SERIEs ◽  
2019 ◽  
Vol 11 (2) ◽  
pp. 157-177
Author(s):  
Carlos Delgado ◽  
Iván Araya ◽  
Gabriel Pino
Keyword(s):  
Monetary Policy ◽  
Business Cycle ◽  
Inflation Targeting ◽  
Short Term Memory ◽  
Aggregate Demand ◽  
Credibility Measure ◽  
Inflation Expectations ◽  
Business Cycle Synchronization ◽  
Vector Autoregressive ◽  
The Impact

Abstract We empirically study the impact of inflation targeting credibility on business cycle synchronization with G-7 economies. To do this, we use a sample of 15 inflation targeting countries to develop and calculate a reputation-based credibility measure for long- and short-term memory. By using dynamic multipliers through a panel vector autoregressive model, our main findings indicate that greater credibility allows for greater anchoring of inflation expectations by economic agents. This would lead to a greater effectiveness of monetary policy in stabilizing the evolution of prices, allowing the output gap to be more sensitive to external aggregate demand shocks. Therefore, countries with inflation targeting regimes must develop and maintain credibility for their monetary policy if they want to encourage greater interactions with the rest of the world.

scholarly journals The Macroeconomics of Trend Inflation

2014 ◽  
Vol 52 (3) ◽  
pp. 679-739 ◽  
Author(s):  
Guido Ascari ◽  
Argia M. Sbordone
Keyword(s):  
Monetary Policy ◽  
Lower Bound ◽  
New Keynesian ◽  
Inflation Expectations ◽  
Positive Trend ◽  
Zero Lower Bound ◽  
Keynesian Model ◽  
Long Run ◽  
Trend Inflation ◽  
Inflation Targets

Most macroeconomic models for monetary policy analysis are approximated around a zero inflation steady state, but most central banks target an inflation rate of about 2 percent. Many economists have recently proposed even higher inflation targets to reduce the incidence of the zero lower bound constraint on monetary policy. In this survey, we show that the conduct of monetary policy should be analyzed by appropriately accounting for the positive trend inflation targeted by policymakers. We first review empirical research on the evolution and dynamics of U.S. trend inflation and some proposed new measures to assess the volatility and persistence of trend-based inflation gaps. We then construct a Generalized New Keynesian model that accounts for a positive trend inflation. In this model, an increase in trend inflation is associated with a more volatile and unstable economy and tends to destabilize inflation expectations. This analysis offers a note of caution regarding recent proposals to address the existing zero lower bound problem by raising the long-run inflation target. (JEL E12, E31, E32, E52, E58)

Political economy of central-bank mandates in developing countries

2021 ◽  
pp. 1-20
Author(s):  
Zhandos Ybrayev
Keyword(s):  
Monetary Policy ◽  
Unemployment Rate ◽  
Inflation Targeting ◽  
Developing Economies ◽  
Emerging Market ◽  
Unemployment Rates ◽  
Inflation Volatility ◽  
Unemployment Volatility ◽  
The Impact ◽  
Fiscal And Monetary Policy

In this paper, I explain theoretically the coordination and conflict scheme of fiscal and monetary policy workings, and then empirically assess the effect of both inflation-targeting and non-inflation-only targeting policies on inflation and unemployment rates. I employ a difference-in-difference method to estimate the impact on inflation, the unemployment rate, and their volatilities in both 10 inflation-targeting (single-mandate) and 11 non-inflation-targeting (multiple-mandate) countries specifically from the sample of developing economies over the period from 1998 to 2018. Our key findings show that while the inflation-targeting countries effectively present a reduction in inflation and inflation volatility, the effects on the unemployment rate are negligible, while unemployment volatility is higher in the period 1998–2008. Finally, the paper argues that the unemployment rate should be used as a natural second target in a typical emerging-market economy case.

IS THE IMPACT OF LABOR TAXES ON UNEMPLOYMENT ASYMMETRIC?

2011 ◽  
Vol 17 (1) ◽  
pp. 143-154
Author(s):  
Tino Berger ◽  
Gerdie Everaert
Keyword(s):  
Positive Impact ◽  
Component Model ◽  
Anglo Saxon ◽  
Unemployment Rates ◽  
Unobserved Component ◽  
Labor Tax ◽  
Asymmetric Impact ◽  
Labor Taxes ◽  
Unobserved Component Model ◽  
The Impact

This paper tests whether increases and decreases in labor taxes have an asymmetric impact on unemployment. Using a panel of 16 OECD countries over the period 1970–2005, we estimate a panel unobserved-component model to account for the fact that unemployment rates and labor taxes are nonstationary but not cointegrated. We find a positive impact of labor tax increases on unemployment in European and Nordic countries, whereas for labor tax decreases, no significant impact is found in these countries. For Anglo-Saxon countries, neither increases nor decreases in labor taxes have any impact on unemployment.

scholarly journals A Review of the Impact of External Shocks on Monetary Policy Effectiveness in Non-WAEMU Countries

2021 ◽  
Vol 31 (3) ◽  
pp. 37-59
Author(s):  
Kordzo Sedegah ◽  
Nicholas M. Odhiambo
Keyword(s):  
Monetary Policy ◽  
Foreign Aid ◽  
Capital Account ◽  
External Shocks ◽  
Foreign Reserves ◽  
Policy Effectiveness ◽  
Exchange Rate Flexibility ◽  
Monetary Policy Effectiveness ◽  
The Impact ◽  
Effectiveness Of Monetary Policy

Abstract In this paper, the extant literature on the impact of external shocks on monetary policy effectiveness with reference to non-WAEMU countries is reviewed. The importance of this literature review is to provide contemporary perspectives to scholars and policymakers on the relevance of the incidence of external shocks to the effectiveness of monetary policy with reference to non-WAEMU countries. The literature reviewed in this study shows that, on the whole, the extent and the degree to which external shocks are transmitted to the domestic economy substantially depend on a plethora of features, namely the absence of exchange rate flexibility; a strong export concentration, especially with respect to commodities; the level of global economic integration; restricted capacities of production; the absence of competitiveness in exports; over-reliance on foreign aid; foreign reserves that are not adequate and capital account openness.

scholarly journals The Relationship Between Unemployment and Immigration: The Case of OECD Countries (2008-2018)

2019 ◽  
Author(s):  
Selahattin Sarı ◽  
Ahmet Ay ◽  
Melike Köksal
Keyword(s):  
Panel Cointegration ◽  
Personal Characteristics ◽  
Oecd Countries ◽  
Cointegration Analysis ◽  
Causality Analysis ◽  
Short Term ◽  
Unemployment Rates ◽  
Long Run ◽  
The Impact

In the broadest sense, immigration is defined as the change of places where people live, and it becomes a more complicated phenomenon when analyzed from the socio-economic, political and psychological aspects. The extent of the impact of migration in this context varies according to the conditions of each country, but it is also related to the number of migrants received and the many personal characteristics of immigrants, such as age, education level. Therefore, there is no unanimity on the subject in the literature. The total number of settled migrations of the 25 OECD countries in the last 10 years has been used. The effects of the migrants employed in the labor markets (registered) on the unemployment rates of the selected countries were investigated. The study period was selected as 2008-2018 years. The data was obtained from the OECD and World Bank databases. In this context, panel causality analysis was applied to investigate the short-term effects of the employed migrants on the unemployment rates of the selected countries. As a result of the analysis, in the short-term, no double or one-way relationship between unemployment and immigration was found. However, in the long run, the cointegration relationship between the variables was determined and the panel cointegration analysis revealed that long-term migration would affect unemployment in the same direction. So, according to the results of the analysis; for the countries examined, there is a long-term and similar relationship between unemployment and settled migrants who participate in labor force in the selected period.

Sign in / Sign up

Export Citation Format

Share Document