Economics, Econometrics and Finance
4 years ago

Expectations of future inflation impact interest rates and economic growth.

SSRN Electronic Journal
Market Discipline and Monetary Policy
Carl E. Walsh

Paper Summary

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The article explores how people's expectations about future inflation can impact inflation rates and interest rates. It shows that when people expect higher inflation in the future, it can lead to higher interest rates in the present. This can also influence how central banks set their inflation targets and affect economic growth.