Inflation targeting and the anchoring of inflation expectations in the CEE countries

Milan Nedeljkovic,Emir Zildzovic,Nebojsa Savic

doi:10.2298/pan150219005n

Milan Nedeljkovic, Emir Zildzovic + Show 1 more

Open Access

https://doi.org/10.2298/pan150219005n

Copy DOI

Abstract

This paper studies the time evolution in the degree and level of anchoring of inflation expectations in four Central and Eastern European inflation targeting countries. The results suggest that the degree of anchoring of inflation expectations increased gradually in all countries over the last decade, while the level of implied inflation targets moved towards the official target. The extent of anchoring increased more strongly in the first years following the IT adoption and more gradually over the later period. We also find that smooth changes of the official target had a positive impact on anchoring.

Highlights

ObjectivesThe experience of the Central and Eastern European (CEE) inflation targeting countries and the time evolution in the anchoring effects of IT are still largely unexplored in literature
This paper is part of the research project “Advancing Serbia’s Competitiveness in the Process of EU Accession”, no. 47028, during the period 2011-2015, supported by the Serbian Ministry of Science and Technological Development
We find that the degree of anchoring of inflation expectations increased in all countries over the last decade, while the level of implied inflation targets moved towards the official target

Summary

Objectives

The experience of the CEE inflation targeting countries and the time evolution in the anchoring effects of IT are still largely unexplored in literature.

Methods

Results

Conclusion