Inflation Forecast Targeting: A VAR Approach

We show how to implement inflation forecast targeting using a VAR model and derive the implied inflation-output variability frontier. Our approach is based on dynamic, stochastic simulations of the average inflation rate over a two-year horizon using the moving average representation of the VAR model. Using real time data over two samples, we estimate the inflation-output variability frontier for the U.S. and show that it has shifted favorably over time. We consider the frequency and nature of the policy interventions required to achieve target inflation in both samples and compare these interventions over time.

Estimating the Inflation-Output Variability Frontier with Inflation Targeting: A VAR Approach

This paper (i) illustrates how a VAR model can be used to evaluate inflation targeting, (ii) derives the policy frontier available to the central bank using counterfactual experiments with real time data, and (iii) estimates how this frontier has changed over time in terms of the position and slope of the available tradeoff between output gap variability and inflation variability under inflation targeting. Various inflation targets are considered as are tolerance bands of varying width around these targets. The results indicate that over time (i) a given reduction in inflation variability is associated with a smaller rise in output variability and that (ii) a given inflation variability is achieved with smaller interest rate volatility. Consistent with the data, our results require federal funds rate persistence, though no instrument instability was observed.

Estimating the Inflation-Output Variability Frontier with Inflation Targeting: A VAR Approach

This paper (i) illustrates how a VAR model can be used to evaluate inflation targeting, (ii) derives the policy frontier available to the central bank using counterfactual experiments with real time data, and (iii) estimates how this frontier has changed over time in terms of the position and slope of the available tradeoff between output gap variability and inflation variability under inflation targeting. Various inflation targets are considered as are tolerance bands of varying width around these targets. The results indicate that over time (i) a given reduction in inflation variability is associated with a smaller rise in output variability and that (ii) a given inflation variability is achieved with smaller interest rate volatility. Consistent with the data, our results require federal funds rate persistence, though no instrument instability was observed. One interpretation of these results is that they reflect the growing credibility of the Federal Reserve.

Navier-Stokes and Euler solutions for lee-side flows over supersonic delta wings. A correlation with experiment

An Euler flow solver and a thin layer Navier-Stokes flow solver were used to numerically simulate the supersonic leeside flow fields over delta wings which were observed experimentally. Three delta wings with 75, 67.5, and 60 deg leading edge sweeps were computed over an angle-of-attack range of 4 to 20 deg at a Mach number 2.8. The Euler code and Navier-Stokes code predict equally well the primary flow structure where the flow is expected to be separated or attached at the leading edge based on the Stanbrook-Squire boundary. The Navier-Stokes code is capable of predicting both the primary and the secondary flow features for the parameter range investigated. For those flow conditions where the Euler code did not predict the correct type of primary flow structure, the Navier-Stokes code illustrated that the flow structure is sensitive to boundary layer model. In general, the laminar Navier-Stokes solutions agreed better with the experimental data, especially for the lower sweep delta wings. The computational results and a detailed re-examination of the experimental data resulted in a refinement of the flow classifications. This refinement in the flow classification results in the separation bubble with the shock flow type as the intermediate flow pattern between separated and attached flows

The use of a Navier-Stokes code in the wing design process

The feasibility was determined of incorporating the Navier-Stokes computational code, CFL3D, into the supersonic wing design process. The approach taken is of two steps. The first step was to calibrate CFL3D against existing experimental data sets obtained on thin sharp edged delta wings. The experimental data identified six flow types which are dependent on the similarity parameters of Mach number and angle of attack normal to the leading edge. The calibration showed CFL3D capable of simulating these various separated and attached flow conditions. The second step was to use CFL3D to study the initial formation of leading edge separation over delta wings at supersonic speeds. This consisted of examining solutions obtained on a 65 deg delta wing at Mach number of 1.6 with varying cross sectional shapes. Reynolds number was held constant at 1000000 and the Baldwin-Lomax turbulence model was used. The study showed that through the use of leading edge radius and/or camber, the onset of leading edge separation can be delayed to a higher angle of attack than observed on a flat sharp edged wing. Based on the geometries studied, three wind tunnel models are being designed to verify these results