Asymmetric inflation target credibility
Coleman W, Nautz D (2025)
Publication Type: Journal article
Publication year: 2025
Journal
Book Volume: 157
Article Number: 103382
DOI: 10.1016/j.jimonfin.2025.103382
Abstract
This paper investigates the determinants of inflation target credibility (ITC) using a unique survey we designed to measure the credibility of the ECB's inflation target. Containing over 200,000 responses from German consumers collected between January 2019 and November 2024, our dataset enables us to estimate the effect of both positive and negative deviations of inflation from the 2 % target on ITC. In contrast to the symmetry of the ECB's inflation target, we find that ITC is asymmetric, i.e., consumers respond significantly and plausibly signed to target deviations only when inflation is above target. When inflation is below target, however, the credibility of the inflation target cannot be improved by raising the inflation rate to close the gap.
Involved external institutions
Germany (DE)How to cite
APA:
Coleman, W., & Nautz, D. (2025). Asymmetric inflation target credibility. Journal of International Money and Finance, 157. https://doi.org/10.1016/j.jimonfin.2025.103382
MLA:
Coleman, Winnie, and Dieter Nautz. "Asymmetric inflation target credibility." Journal of International Money and Finance 157 (2025).
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