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Economic Brief

October 2008, No. 08-01

Inflation Expectations: Their Sources and Effects

Yash P. Mehra and Devin Reilly

Shocks to the macroeconomy can affect the public's expectations about inflation. But if the Federal Reserve monitors those expectations carefully and vigilantly pursues price stability, it can establish credibility and keep inflation in check.

Additional Resources

Mehra, Yash and Christopher Herrington. "On the Sources of Movements in Inflation Expectations: A Few Insights from a VAR Model." Federal Reserve Bank of Richmond Economic Quarterly 94, no. 2 (Spring 2008): 121-146.

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