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1 août 2016
- handle: 10670/1.s7gy30
- hal: hal-03471880
- SCIENCESPO: 2441/713kqq1pgu80lr8fn0lsuuh8lf
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info:eu-repo/semantics/altIdentifier/hdl/2441/713kqq1pgu80lr8fn0lsuuh8lf
info:eu-repo/semantics/OpenAccess
Mots-clés
Forward guidance Inflation Signaling E - Macroeconomics and Monetary Economics/E.E3 - Prices, Business Fluctuations, and Cycles/E.E3.E31 - Price Level • Inflation • Deflation E - Macroeconomics and Monetary Economics/E.E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit/E.E5.E52 - Monetary Policy E - Macroeconomics and Monetary Economics/E.E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook/E.E6.E65 - Studies of Particular Policy EpisodesSujets proches
Falsehood Credibility Untruthfulness Believability Lying Monetary managementCiter ce document
Jean Barthélemy et al., « The Signaling Effect of Raising Inflation », Archive ouverte de Sciences Po (SPIRE), ID : 10670/1.s7gy30
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Résumé
This paper argues that central bankers should raise inflation when anticipating liquidity traps to signal their credibility to forward guidance policies. As stable inflation in normal times either stems from central banker's credibility, e.g. through reputation, or from his aversion to inflation, the private sector is unable to infer the central banker's type from observing stable inflation, jeopardizing the efficiency of forward guidance policy. We show that this signaling motive can justify level of inflation well above 2% but also that the low inflation volatility during the Great Moderation was insufficient to ensure fully efficient forward guidance when needed.