Raising inflation expectations may depress growth – Jackson Hole paper
More nuanced communication would help public understand state of the economy, say researchers
Central banks using a communication strategy to raise inflation expectations and stimulate economic activity may end up worsening the situation, a paper presented at the Jackson Hole 2020 conference finds.
A communication policy aiming to raise inflation expectations could “backfire”, co-author Yuriy Gorodnichenko told the conference. Central banks needed to adopt a more nuanced approach to using inflation expectations to stimulate economy activity, he said.
In the paper, Gorodnichenko and his
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