Perhaps the FOMC Did What It Said It Did: An Alternative Interpretation of the Great Inflation

Sharon Kozicki and Peter Tinsley

Staff Working Papers from Bank of Canada

Abstract: This paper uses real-time briefing forecasts prepared for the Federal Open Market Committee (FOMC) to provide estimates of historical changes in the design of U.S. monetary policy and in the implied central-bank target for inflation. Empirical results support a description of policy with an effective inflation target of roughly 7 percent in the 1970s. Moreover, the evidence suggests that mismeasurement of the degree of economic slack was largely irrelevant for explaining the Great Inflation while favouring a passive-policy description of monetary policy. FOMC transcripts provide a neglected interpretation of the source of passive policy--intermediate targeting of monetary aggregates.

Keywords: Central bank research; Monetary aggregates; Monetary policy implementation (search for similar items in EconPapers)
JEL-codes: E3 E5 N1 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2007
New Economics Papers: this item is included in nep-cba, nep-his, nep-mac and nep-mon
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Citations: View citations in EconPapers (8)

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Working Paper: Perhaps the FOMC did what it said it did: an alternative interpretation of the Great Inflation (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:07-19

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