## Estimating the Implicit Inflation Target: An Application to U.S. Monetary Policy

_IMF Working Papers, April 1, 2005_

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**Canonical URL:** [Estimating the Implicit Inflation Target: An Application to U.S. Monetary Policy](https://www.imf.org/en/publications/wp/issues/2016/12/31/estimating-the-implicit-inflation-target-an-application-to-u-s-18007)

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## Bibliographic details
- Authors: Daniel Leigh
- Published: April 1, 2005
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451860962.001

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### Methodology
- Proposes a new method of estimating the Taylor rule with:
  - a time-varying implicit inflation target, and
  - a time-varying natural rate of interest.
- The inflation target and the natural rate are modeled as random walks.
- Estimation technique: maximum likelihood combined with the Kalman filter.

### Application and Findings
- Empirical application: U.S. monetary policy over the past 25 years.
- Key finding: considerable time variation in the implicit inflation target.
- Interpretation: results confirm hypotheses about "opportunistic disinflation" and the recent "deflation scare."

### Subjects and Keywords
- Subject: Disinflation, Estimation techniques, Inflation, Inflation targeting, Output gap
- Keywords: inflation target, rate of interest, WP

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/estimating-the-implicit-inflation-target-an-application-to-u-s-18007_