Transparency, Expectations Anchoring and Inflation Target

Guido Ascari, Anna Florio, Alessandro Gobbi

Research output: Contribution to journalArticle

6 Citations (Scopus)


In various speeches, former Fed Chairman Ben Bernanke contrasted the proposal of setting a higher inflation target by claiming that it could unanchor inflation expectations. A standard New Keynesian framework with learning supports this claim both asymptotically, because a higher inflation target shrinks the E-stability region when a central bank follows a Taylor rule, and in the transition phase, because a higher inflation target slows down the speed of convergence of expectations. Transparency helps anchoring expectations. However, the importance of being transparent diminishes with the level of the inflation target. Finally, the higher the inflation target, the more policy should respond to inflation and the less to output to guarantee E-stability. Hence, a policy that increases both the inflation target and the monetary policy response to output would be “reckless”.
Original languageEnglish
Pages (from-to)261-273
Number of pages13
JournalEuropean Economic Review
VolumeVolume 91
Publication statusPublished - 2017


  • Learning
  • Monetary Policy
  • Transparency
  • Trend Inflation


Dive into the research topics of 'Transparency, Expectations Anchoring and Inflation Target'. Together they form a unique fingerprint.

Cite this