The Abstract: The Morning After ... an Inflation Target

A roundup of recent noteworthy research:

Inflation Targeting and Monetary Policy Activism 
Toshitaka Sekine and Yuki Teranishi, Bank of Japan
"We estimate monetary policy activism, defined as responsiveness of the policy interest rate to inflation, among five inflation-targeting countries (the UK, Canada, Sweden, Australia and New Zealand) plus the G3 (the US, Japan and Germany)...We find that activism of inflation-targeting countries tends to have increased before (not after) the adoption of the inflation-targeting policy framework and that these countries have experienced a decline in activism in recent years, albeit to different degrees.

A theoretical model, which explicitly takes into account an inflation target range, suggests that the decline in monetary policy activism is in fact because of the successful inflation records of these central banks rather than a genuine change in their preference for inflation stability. The conjecture goes as follows: because of their success in keeping inflation within the target ranges, their credibility has improved and inflation expectations have become well contained."


City Business Cycles and Crime
Thomas Garrett and Lesli Ott, Federal Reserve Bank of St. Louis
"We explore the influence of city-level business cycle fluctuations on crime in 20 large cities in the United States.  Our monthly time series analysis considers seven crimes over an approximately 20-year period: murder, rape, assault, robbery, burglary, larceny, and motor vehicle theft.  Short-run changes in economic conditions, as measured by changes in unemployment and wages, are found to have little effect on city crime across many cities, but property crimes were more likely to be influenced by changes in economic conditions than were more violent crimes.  Contrary to the deterrence hypothesis, we find strong evidence that in many cities more arrests follow from an increase in crime rather than arrests leading to a decrease in crime.  This is true especially for the more visible crimes of robbery and vehicle theft and suggests that city officials desire to remove these crimes from the public's view."