Journal Articles

The Effectiveness of Monetary Policy Anchors: Firm-Level Evidence

---

Analyses of monetary policy posit that exchange-rate pegs, inflation targets, and central bank independence can help anchor private-sector inflation expectations. Yet there are few direct tests of this argument. We offer cross-national, micro-level evidence on the effectiveness of monetary anchors in controlling private-sector inflation concerns. Using firm-level data from eighty-one countries (approximately 10,000 firms), we find evidence that “international” anchors (exchange-rate commitments) correlate significantly with a substantial reduction in private-sector concerns about inflation while “domestic” anchors (inflation targeting and central bank independence) do not. Our conjecture is that private-sector inflation expectations are more responsive to exchange-rate anchors because they are more transparent, more constraining, and more costly than domestic anchoring arrangements.

---

Availability

No copy data

Detail Information

Series Title

International Organization

Call Number

-

Publisher

Cambridge : Cambridge University Press., 2010

Collation

-

Language

English

ISBN/ISSN

00208183

Classification

-

Content Type

-

Media Type

-

Carrier Type

-

Edition

Vol. 64, No. 4, Fall 2010 .pp. 695-717

Subject(s)

-

Specific Detail Info

-

Statement of Responsibility

-

Other version/related

File Attachment

Comments

---

You must be logged in to post a comment