Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/84706
Authors: 
Kuttner, Kenneth N.
Posen, Adam S.
Year of Publication: 
2011
Series/Report no.: 
External MPC Unit Discussion Paper 34
Abstract: 
This paper takes up the issue of the flexibility of inflation targeting regimes, with the specific goal of determining whether the monetary policy of the Bank of England, which has a formal inflation target, has been any less flexible than that of the Federal Reserve, which does not have such a target. The empirical analysis uses the speed of inflation forecast convergence, estimated from professional forecasters' predictions at successive forecast horizons, to gauge the perceived flexibility of the central bank's response to macroeconomic shocks. Based on this criterion, there is no evidence to suggest that the Bank of England's inflation target has compelled it to be more aggressive in pursuit of low inflation than the Federal Reserve.
Subjects: 
Inflation targeting
inflation expectations
monetary policy
JEL: 
E42
E58
E65
Document Type: 
Working Paper

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