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This paper asks whether inflation targeting improves economic performance, as measured by the behavior of inflation, output, and interest rates. We compare 7 OECD countries that adopted inflation targeting in the early 1990s to 13 that did not. After the early 1990s, performance improved along many dimensions for both targeting and nontargeting countries. In some cases, the targeters improved by more. However, these differences are explained by the fact that targeters performed worse than nontargeters before the early 1990s, and there is regression towards the mean. Once one controls for this, there is no evidence that inflation targeting improves performance.

Banks and Banking --- Inflation --- Macroeconomics --- Money and Monetary Policy --- Corporate Taxation --- Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) --- Price Level --- Deflation --- Monetary Policy --- Central Banks and Their Policies --- Business Taxes and Subsidies --- Macroeconomics: Production --- Interest Rates: Determination, Term Structure, and Effects --- Monetary economics --- Corporate & business tax --- Finance --- Inflation targeting --- Corporate income tax --- Production growth --- Short term interest rates --- Prices --- Monetary policy --- Taxes --- Production --- Financial services --- Corporations --- Taxation --- Economic theory --- Interest rates --- New Zealand

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The fall in the U.S. public debt/GDP ratio from 106% in 1946 to 23% in 1974 is often attributed to high rates of economic growth. This paper examines the roles of three other factors: primary budget surpluses, surprise inflation, and pegged interest rates before the Fed-Treasury Accord of 1951. Our central result is a simulation of the path that the debt/GDP ratio would have followed with primary budget balance and without the distortions in real interest rates caused by surprise inflation and the pre-Accord peg. In this counterfactual, debt/GDP declines only to 74% in 1974, not 23% as in actual history. Moreover, the ratio starts rising again in 1980 and in 2022 it is 84%. These findings imply that, over the last 76 years, only a small amount of debt reduction has been achieved through growth rates that exceed undistorted interest rates.

Banks and Banking --- Currency crises --- Debt Management --- Debt service --- Debt --- Debts, Public --- Deflation --- Economic & financial crises & disasters --- Economics of specific sectors --- Economics --- Economics: General --- Exports and Imports --- External debt --- Finance --- Financial services --- Fiscal Policy --- Fiscal policy --- Fiscal stance --- Inflation --- Informal sector --- Interest payments --- Interest rates --- Interest Rates: Determination, Term Structure, and Effects --- International economics --- International Lending and Debt Problems --- Macroeconomics --- National Budget, Deficit, and Debt: General --- Price Level --- Prices --- Public debt --- Public finance & taxation --- Public Finance --- Real interest rates --- Sovereign Debt --- Studies of Particular Policy Episodes

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This paper examines inflation dynamics in the United States since 1960, with a particular focus on the Great Recession. A puzzle emerges when Phillips curves estimated over 1960-2007 are ussed to predice inflation over 2008-2010: inflation should have fallen by more than it did. We resolve this puzzle with two modifications of the Phillips curve, both suggested by theories of costly price adjustment: we measure core inflation with the median CPI inflation rate, and we allow the slope of the Phillips curve to change with the level and vairance of inflation. We then examine the hypothesis of anchored inflation expectations. We find that expectations have been fully "shock-anchored" since the 1980s, while "level anchoring" has been gradual and partial, but significant. It is not clear whether expectations are sufficiently anchored to prevent deflation over the next few years. Finally, we show that the Great Recession provides fresh evidence against the New Keynesian Phillips curve with rational expectations.

Inflation (Finance) --- Global Financial Crisis, 2008-2009. --- Global Economic Crisis, 2008-2009 --- Subprime Mortgage Crisis, 2008-2009 --- Financial crises --- Finance --- Natural rate of unemployment --- Econometric models. --- Inflation --- Labor --- Economic Theory --- Production and Operations Management --- Price Level --- Deflation --- Unemployment: Models, Duration, Incidence, and Job Search --- Agriculture: Aggregate Supply and Demand Analysis --- Prices --- Macroeconomics: Production --- Wages, Compensation, and Labor Costs: General --- Macroeconomics --- Labour --- income economics --- Economic theory & philosophy --- Unemployment --- Supply shocks --- Output gap --- Labor share --- Economic theory --- Production --- Supply and demand --- Wages --- United States --- Income economics

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This paper provides an assessment of the consistency of unemployment and output forecasts. We show that, consistent with Okun’s Law, forecasts of real GDP growth and the change in unemployment are negatively correlated. The Okun coefficient—the responsiveness of unemployment to growth—from forecasts is fairly similar to that in the data for various countries. Furthermore, revisions to unemployment forecasts are negatively correlated with revisions to real GDP forecasts. These results are based on forecasts taken from Consensus Economics for nine advanced countries since 1989.

Labor laws and legislation. --- Labor market. --- Unemployment. --- Joblessness --- Employment (Economic theory) --- Full employment policies --- Labor supply --- Manpower policy --- Underemployment --- Employees --- Market, Labor --- Supply and demand for labor --- Markets --- Employment law --- Industrial relations --- Labor law --- Labor standards (Labor law) --- Work --- Working class --- Industrial laws and legislation --- Social legislation --- Supply and demand --- Legal status, laws, etc. --- Law and legislation --- Labor --- Macroeconomics --- Forecasting and Other Model Applications --- Forecasting and Simulation: Models and Applications --- Prices, Business Fluctuations, and Cycles: Forecasting and Simulation --- Fiscal Policy --- Unemployment: Models, Duration, Incidence, and Job Search --- Financial Crises --- Labour --- income economics --- Economic Forecasting --- Economic & financial crises & disasters --- Unemployment --- GDP forecasting --- Unemployment rate --- National accounts --- Global financial crisis of 2008-2009 --- Financial crises --- National income --- Global Financial Crisis, 2008-2009 --- Germany --- Gdp forecasting --- Income economics

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This paper examines the distributional effects of fiscal consolidation. Using episodes of fiscal consolidation for a sample of 17 OECD countries over the period 1978–2009, we find that fiscal consolidation has typically had significant distributional effects by raising inequality, decreasing wage income shares and increasing long-term unemployment. The evidence also suggests that spending-based adjustments have had, on average, larger distributional effects than tax-based adjustments.

Fiscal policy. --- Economic stabilization. --- Adjustment, Economic --- Business stabilization --- Economic adjustment --- Stabilization, Economic --- Economic policy --- Tax policy --- Taxation --- Finance, Public --- Government policy --- Labor --- Macroeconomics --- Fiscal Policy --- Incomes Policy --- Price Policy --- Equity, Justice, Inequality, and Other Normative Criteria and Measurement --- Aggregate Factor Income Distribution --- Personal Income, Wealth, and Their Distributions --- Unemployment: Models, Duration, Incidence, and Job Search --- Labour --- income economics --- Fiscal consolidation --- Income inequality --- Personal income --- Income distribution --- Unemployment --- Fiscal policy --- National accounts --- Income --- United Kingdom --- Income economics