Managing inflation expectations and the efficiency of monetary policy responses to energy crises

While ascertaining low and stable inflation expectations is a significant challenge across developed and emerging economies, energy shocks are central to this endeavor. Therefore, this study's prime objective is to investigate the role of energy shocks, monetary policy, and fiscal policy in managing inflation expectations in the context of the Federal Reserve's inflation targeting regime, adopted in 2012. We analyze monthly data on the United States from 1994 to 2022. Using the linear Autoregressive Distributed Lag (ARDL) and the Quantile ARDL (QARDL) estimators, we analyze and compare three different samples: full period, pre-inflation targeting regime (1994 to 2012), and post-inflation targeting regime (2012 to 2022). The conclusions suggest that inflation, energy shocks, and money supply have significant implications for inflation expectations in most quantiles during pre- and post-inflation targeting regimes. Policy implications for research and practice are also discussed.