An overhaul of doctrine
Subtitle: the underpinning of U.K. inflation targeting
By: by Edward Nelson
Contributors: Federal Reserve Bank of St. Louis
Series: Working paper -- 2007-026A; Working paper (Federal Reserve Bank of St. Louis : Online) -- 2007-026A.
Publisher: Federal Reserve Bank of St. Louis
Published: 2007
Place of publication: St. Louis, Mo.]
Language: eng
Format: [electronic resource] :
Description: "This paper argues that the inflation targeting regime prevailing in the United Kingdom is not the result of a change in policymaker objectives.  By conducting an analysis of U.K.  policymakers that parallels Romer and Romer's (2004) study of Federal Reserve Chairmen, I demonstrate that policymaker objectives have been essentially unchanged over the past five decades.  Instead, the crucial underpinning of U.K.  inflation targeting has been an overhaul of doctrine--"a changed view of the transmission mechanism.  This overhaul can be understood in terms of changes in policymakers' views on the values of a few key parameters in their specifications of the economy's IS and Phillips curves.  Specifically, the changed views pertain to the issues of whether interest rates enter the IS equation, and the extent of policymaker influence on those rates; whether the level of the output gap appears in the Phillips curve when the gap is negative; and whether a speed-limit term matters for inflation dynamics.  Contrary to conventional wisdom, changing views on the expected-inflation term in the Phillips curve do not play a role"--Federal Reserve Bank of St. Louis web site.
Notes: Title from PDF file as viewed on 7/23/2007.

Includes bibliographical references.

Also available in print.

System requirements: Adobe Acrobat Reader.

Mode of access: World Wide Web.