The Lower and Upper Bounds of the Federal Open Market Committee's Long-Run Inflation Objective (ICPSR 1344)

Version Date: May 16, 2007

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Principal Investigator(s):
Daniel L. Thornton, Federal Reserve Bank of St. Louis

https://doi.org/10.3886/ICPSR01344.v1

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Summary

It is widely acknowledged that the Fed can control the average inflation rate over a period of time reasonably well. Because of this and the Federal Open Market Committee's (FOMC's) long-standing commitment to price stability, the author argues that the FOMC has an implicit long-run inflation objective (LIO) lower and upper bounds to the long-run inflation rate. He shows that the statements made by the FOMC in 2003 clarified the lower bound of its LIO and that the average of long-run inflation expectations responded by rising about 80 basis points. Moreover, consistent with reducing the market's uncertainty about the FOMC's LIO, long-run inflation expectations became more stable. The FOMC has recently been more specific about the upper bound of its LIO as well. The FOMC could eliminate the remaining uncertainty by establishing an explicit, numerical inflation objective.

Citation

Thornton, Daniel L. The Lower and Upper Bounds of the Federal Open Market Committee’s Long-Run Inflation Objective. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2007-05-16. https://doi.org/10.3886/ICPSR01344.v1

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Funding

Federal Reserve Bank of St. Louis. Research Division

Subject Terms

Distributor(s)

Inter-university Consortium for Political and Social Research
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Data Collection Notes

  1. (1) One Excel file is both a data and program file. (2) These data are part of ICPSR's Publication-Related Archive and are distributed exactly as they arrived from the data depositor. ICPSR has not checked or processed this material. Users should consult the investigators if further information is desired.

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Original Release Date

2007-05-16

Version History

2018-02-15 The citation of this study may have changed due to the new version control system that has been implemented. The previous citation was:

  • Thornton, Daniel L. The Lower and Upper Bounds of the Federal Open Market Committee's Long-Run Inflation Objective. ICPSR01344-v1. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2007-05-16. http://doi.org/10.3886/ICPSR01344.v1

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Notes

  • These data are flagged as replication datasets and are distributed exactly as they arrived from the data depositor. ICPSR has not checked or processed this material. Users should consult the investigator(s) if further information is desired.

  • The public-use data files in this collection are available for access by the general public. Access does not require affiliation with an ICPSR member institution.