An electronic version of the paper may be downloaded • from the SSRN website: www.SSRN.com • from the RePEc website: www.RePEc.org • from the CESifo website: Twww.CESifo-group.org/wp T

Abstract not found

measures based on documents from the DJ Factiva news database, in addition to the Internet-based ones. The authors would like to thank Matilde Bombardini, John Cochrane, Erik Hurst, Anil Kashyap, Monika Piazzesi, Jonathan Wright and Egon Zakrajsek for their comments and suggestions, as well as participants at various seminars and Ken Kuttner, our discussant at the meeting of the NBER Monetary

Inflation targeting has been widely adopted in both developed and emerging economies. In this essay, I survey the evidence on the effects of inflation targeting on macroeconomic performance and assess what lessons this evidence provides for inflation targeting and the design of monetary policy. While macroeconomic experiences among both inflation targeting and non-targeting developed economies have been similar, inflation targeting has improved macroeconomic performance among developing economies. Importantly, inflation targeting has not been associated with greater real economic instability among either developed or developing economics. While cost shocks, such as the large rise in commodity prices that occurred in 2007 and early 2008, force central banks to make difficult short-run trade-offs, the ability to deal with demand shocks and financial crises can be enhanced by a commitment to an explicit target. This article was adapted from the John Kuszczak Memorial Lecture, prepared for the conference on ‘International Experience with the Conduct of Monetary Policy under Inflation Targeting’, held at the Bank of Canada, 22–23 July 2008. I would like to thank Mahir Binici for excellent research assistance and conference participants and an anonymous referee for comments and suggestions. Views expressed and remaining errors are my own.

Inflation has been well contained over the last decades in most industrialized countries. This implies, however, that memories of high inflation are likely to fade, because over time larger parts of the population have never experienced high inflation, whereas those who have might forget. This paper tests whether memories of high inflation affect agents ’ preferences about the importance attached to price stability, using a large database covering over 52,000 survey responses from 23 countries over the years 1981-2000. It finds that memories of hyperinflation are there to last, whereas those of less drastic inflation experiences tend to erode after around 10 to 15 years. The recent decline in the importance attached to price stability does therefore most likely reflect mitigated inflation concerns in an environment of low and stable inflation, but also the consequences of fading memories of high inflation. The longer central banks have successfully delivered price stability, the more important it is for them to engage in a pro-active communication, especially with the younger generations, about the merits of low and stable inflation. JEL classification: D10, E31, E52.

A study was conducted to investigate the effects of interaction analysis feedback on the verbal behavior of student teachers. Forty randomly selected senior elementary education students at the University of South Florida were trained in interaction analysis, and each Was observed for eight weekly 15-minute periods during student teaching. Data, collected from systematic observations by four trained observers using a 13-category modification of the Flanders System of Interaction Analysis, were submitted to an IBM 1410 computer which produced matrices and information sheets weekly for the 40 students. Only the 20 designated as the "feedback group " (experimental) received the weekly matrices and information sheets. Data were analyzed by means of a Lindquist Type I analysis of variance, and F-tests for group means difference were computed for each of the 24 selected dependent variables. Findings included these: The experimental 'group used significantly less teacher-initiated talk and significantly more student-initiated talk than did the control group. They also used more praise, more extended use of student ideas, and less corrective feedback. They accepted and clarified student ideas more, criticized

The paper assesses the extent to which the Group of Seven (G7) has been successful in its management of major currencies since the 1970s. Using an event-study approach, the paper finds evidence that the G7 has been overall effective in moving the US dollar, yen and euro in the intended direction at horizons of up to three months after G7 meetings, but not at longer horizons. While the success of the G7 is partly dependent on the market environment, it is also to a significant degree endogenous to the policy process itself. The findings indicate that the reputation and credibility of the G7, as well as its ability to form and communicate a consensus among individual G7 members, are important determinants for the G7’s ability to manage major currencies. The paper concludes by analyzing the factors that help the G7 build reputation and consensus, and by discussing the implications for global economic governance.

In 2011 all ECB publications feature a motif taken from the €100 banknote. NOTE: This Working Paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB. This paper can be downloaded without charge from

effectiveness of quantitative forward guidance evidence from three inflation targeters

This paper studies the effects of ECB communications about unconventional monetary policy operations on the perceived sovereign risk of Italy over the last five years. More than fifty events concerning non-standard operations are identified and classified with respect to the specific ECB program. The empirical results are derived from both an event-study analysis and a GARCH framework, which uses Italian long-term bond futures to disentangle expected from unexpected policy actions. We find that the ECB announcements about unconventional monetary policies substantially reduced Italian long-term government bond yield spread relative to German counterparts. Particularly, among the different types of measures, news about the Securities Markets Programme and the Outright Monetary Transactions are found to be effective in affecting the perceived sovereign risk of Italy.