• Add to calendar
    Bank of Finland, Rauhankatu 19 B, Helsinki

Haaron Mumtaz (Queen Mary University of London): The Federal Reserve’s implicit inflation target and macroeconomic dynamics: a SVAR analysis

Co-author: Konstantinos Theodoridis


This paper identi…es shocks to the Federal Reserve’s infl‡ation target as VAR innovations that make the largest contribution to future movements in long-horizon infl‡ation expectations. The effectiveness of this scheme is documented via Monte-Carlo experiments. The estimated impulse responses indicate that a positive shock to the target is associated with a large increase in infl‡ation and long-term interest rates in the US and the industrialised world. Target shocks are estimated to be a vital factor behind the increase in infl‡ation during the pre-1980 period and are an important driver of the decline in long-term interest rates over the last two decades.




Research seminars organised by the Bank of Finland's research unit are held on Thursdays at 10:30–11:45 in Rauhankatu 19, 3rd floor big meeting room (unless indicated otherwise). Seminars are held in English.

Research seminars are open to all economists (unless indicated otherwise). Please register in advance at research(at)bof.fi by noon of the preceding day. Visitors will be escorted from Rauhankatu 19 B (Kirjasto/Library) entrance to the seminar room 10 minutes before the seminar.