TY  - JOUR
AU  - Ireland,Peter N.
TI  - Changes in the Federal Reserve's Inflation Target: Causes and Consequences
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12492
PY  - 2006
Y2  - August 2006
UR  - http://www.nber.org/papers/w12492
L1  - http://www.nber.org/papers/w12492.pdf
N1  - Author contact info:
Peter N. Ireland
Boston College
Department of Economics
140 Commonwealth Ave.
Chestnut Hill, MA 02467-3859
Tel: 617/552-3687
Fax: 617/552-2308
E-Mail: irelandp@bc.edu
AB  - This paper estimates a New Keynesian model to draw inferences about the behavior of the Federal Reserve's unobserved inflation target. The results indicate that the target rose from 1 1/4 percent in 1959 to over 8 percent in the mid-to-late 1970s before falling back below 2 1/2 percent in 2004. The results also provide some support for the hypothesis that over the entire postwar period, Federal Reserve policy has systematically translated short-run price pressures set off by supply-side shocks into more persistent movements in inflation itself, although considerable uncertainty remains about the true source of shifts in the inflation target.
ER  -