Investigating the method of reducing the inflationrate in developed and developing countries

In many developed countries, expansionary monetary policies are created to deal withunemployment or to get out of recession, but the question is why these policies, which aremainly faced with liquidity injection, do not cause hyperinflation in countries. The golden keyof the story is the control of inflationary expectations. According to studies, controllinginflationary expectations makes supply and demand shocks not have a significant impact onthe economy. By stabilizing inflationary expectations, governments can implementexpansionary policies in society in times of crisis without causing inflation. In order tostabilize inflation expectations, central banks must guarantee the future conditions of theeconomy, adhere to a nominal anchor, and finally have sufficient independence andcredibility in this regard. Continuous measurement of inflation expectations will be veryimportant to recognize the right economic policies, for this two general methods are used;The first method is based on a survey and the second method is based on the behavior ofeconomic entities in the market, especially in the long-term bond market.

Keywords:

reducing the inflation rate , Central bank independence , monetary policy , inflationary expectations.