Flatter Phillips curve calls for average inflation targeting – Brookings paper


Average inflation targeting would be more effective than the current symmetric 2% target in lifting inflation back to target after a downturn, a paper published by the Brookings Institution finds.

Marco Del Negro and co-authors examine why inflation has been less responsive to business cycles over the last three decades. They then use an econometric model to explore whether average inflation targeting would better return inflation to target following a recession.

They find that inflation has

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