Targeting inflation expectations?

2026

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This paper investigates how inflation expectations respond to monetary policy regime changes, specifically the adoption of inflation targeting (IT).

* Examines the theoretical implications of IT adoption under rational expectations and adaptive learning models.
* Empirically analyzes survey data from 32 countries to assess the impact of staggered IT adoption on inflation expectations and realized inflation.
* Finds that realized inflation declines following IT adoption, but survey expectations show little systematic adjustment, suggesting credibility is built over time through delivered outcomes.

Tags: inflation expectations, monetary policy, adaptive learning, regime shifts, credibility

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