Pitfalls of average inflation targeting when agents have imperfect knowledge
Recent challenges have generated interest in new monetary policy frameworks, including average inflation targeting. The Federal Reserve adopted this policy in 2020, but they have not communicated many details about the policy itself. This column argues that an opaque average inflation targeting policy can de-anchor inflation expectations from the target equilibrium – even if expectations are initially well-anchored. Policymakers should be cautious when implementing average inflation targeting.
University-industry collaboration at the heart of knowledge-based economic growth
By Brajesh Panth, Shanti Jagannathan The Republic of Korea and the People’s Republic of China offer 4 lessons for developing countries to strengthen their higher education systems and innovation capacities. Educated and skilled human resources are the backbone that help to build innovative capacities in economies as they move from factor-driven to efficiency-driven and then to knowledge-driven […]
