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We examine the impact of formal adoption of inflation targeting (IT) on inflation, growth and anchoring of inflation expectations in advanced economies and emerging markets and developing economies (EMDEs). Our paper reports several findings relevant to assessing the success of IT regimes. We find that while the early adopters of IT (pre-2000) all saw declines in inflation rates following adoption, IT adopters since then have enjoyed such success in only about half the cases. Since there is not much difference, on average, between IT and non-IT countries in mean inflation, inflation volatility and the extent of inflation anchoring, it is not easy to sort out what role IT has played in ensuring good outcomes; in particular, we cannot rule out the possibility that the success of IT may be due to ‘regression to the mean’. Our country-level analysis—using the Synthetic Control Method (SCM) to compare outcomes in IT countries to a synthetic cohort—shows that IT adoption delivers significant inflation gains in about a third of the cases. At the same time, we also find limited support for the concern that adoption of IT systematically leads to poorer growth outcomes. At a time when central banks are struggling to keep inflation in check, our results suggest that the belief that IT adoption will be sufficient to achieve this goal cannot be taken for granted.

Macroeconomics --- Economics: General --- Inflation --- Money and Monetary Policy --- Finance: General --- Business Fluctuations --- Cycles --- Expectations --- Speculations --- Price Level --- Deflation --- Monetary Policy --- General Financial Markets: General (includes Measurement and Data) --- Economic & financial crises & disasters --- Economics of specific sectors --- Monetary economics --- Finance --- Prices --- Inflation targeting --- Monetary policy --- Emerging and frontier financial markets --- Financial markets --- Currency crises --- Informal sector --- Economics --- Financial services industry --- Mexico

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Using a novel approach involving natural language processing (NLP) algorithms, we construct a new cross-country index of firms' inflation expectations from earnings call transcripts. Our index has a high correlation with existing survey-based measures of firms' inflation expectations, it is robust to external validation tests and is built using a new method that outperforms other NLP algorithms. In an application of our index to United States, we uncover some facts related to firm's inflation expectations. We show that higher expected inflation translates into future inflation. Going into the firms level dimension of our index, we show departures from a rational framework in firms' inflation expectations and that firms' attention to the central enhances monetary policy effectiveness.

Artificial intelligence --- Consumer price indexes --- Currency crises --- Deflation --- Derivative securities --- Diffusion Processes --- Economic & financial crises & disasters --- Economics of specific sectors --- Economics --- Economics: General --- Expectations --- Finance --- Financial institutions --- Financial Instruments --- Futures --- Income economics --- Inflation --- Informal sector --- Institutional Investors --- Intelligence (AI) & Semantics --- Investments: Futures --- Labor --- Labour --- Macroeconomics --- Mathematical and Quantitative Methods: General --- Non-bank Financial Institutions --- Pension Funds --- Price indexes --- Price Level --- Prices --- Speculations --- Technological Change: Choices and Consequences --- Technology --- Wages --- Wages, Compensation, and Labor Costs: General

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This study seeks to construct a basic reinforcement learning-based AI-macroeconomic simulator. We use a deep RL (DRL) approach (DDPG) in an RBC macroeconomic model. We set up two learning scenarios, one of which is deterministic without the technological shock and the other is stochastic. The objective of the deterministic environment is to compare the learning agent's behavior to a deterministic steady-state scenario. We demonstrate that in both deterministic and stochastic scenarios, the agent's choices are close to their optimal value. We also present cases of unstable learning behaviours. This AI-macro model may be enhanced in future research by adding additional variables or sectors to the model or by incorporating different DRL algorithms.

Macroeconomics --- Economics: General --- Intelligence (AI) & Semantics --- Economic Theory --- Financial Risk Management --- Computational Techniques --- Quantitative Policy Modeling --- Information, Knowledge, and Uncertainty: General --- Prices, Business Fluctuations, and Cycles: Forecasting and Simulation --- Technological Change: Choices and Consequences --- Diffusion Processes --- Labor Economics: General --- Expectations --- Speculations --- Debt --- Debt Management --- Sovereign Debt --- Economic & financial crises & disasters --- Economics of specific sectors --- Artificial intelligence --- Machine learning --- Labour --- income economics --- Economic theory & philosophy --- Finance --- Technology --- Labor --- Rational expectations --- Economic theory --- Debt relief --- Asset and liability management --- Currency crises --- Informal sector --- Economics --- Labor economics --- Debts, External --- Income economics

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The spread of the COVID-19 pandemic and government interventions have reshaped economic activity with abrupt changes in household consumption behavior across the world. This paper provides an empirical investigation of how the COVID-19 vaccine rollout has affected consumer spending at daily frequency using debit and credit card transactions in three European countries. Empirical results show that COVID-19 vaccinations, along with other policy interventions, have mitigated the severe negative impact of the pandemic and boosted consumer spending. First, the vaccination deployment has a statistically and economically significant positive effect on private consumption. Second, other policy responses to the pandemic—designed to contain the spread of the virus and provide support to businesses and households—have significant effects on the amount and composition of debit and credit card transactions. Third, the impact of COVID-19 vaccinations in terms of stimulating consumer spending appears to be more pronounced on contact-intensive sectors such as services than goods.

Macroeconomics --- Economics: General --- Diseases: Contagious --- Vaccinations --- Money and Monetary Policy --- Consumer Economics: Empirical Analysis --- Market Structure and Pricing: Oligopoly and Other Forms of Market Imperfection --- Criteria for Decision-Making under Risk and Uncertainty --- Expectations --- Speculations --- Macroeconomics: Consumption --- Saving --- Wealth --- Business Fluctuations --- Cycles --- Monetary Policy --- Health: General --- Production, Pricing, and Market Structure --- Size Distribution of Firms --- Climate --- Natural Disasters and Their Management --- Global Warming --- Health Behavior --- Health: Government Policy --- Regulation --- Public Health --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Urban, Rural, and Regional Economics: Household Analysis: General --- Economic & financial crises & disasters --- Economics of specific sectors --- Infectious & contagious diseases --- Vaccination --- Monetary economics --- Health economics --- Health --- Money --- National accounts --- Currency crises --- Informal sector --- Economics --- Communicable diseases --- Consumer credit --- Consumption