Open-Economy Inflation Targeting
TL;DR: The authors extended previous analysis of closed-economy inflation targeting to a small open economy with forward-looking aggregate supply and demand, and with stylized realistic lags in the different transmission channels for monetary policy.
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Abstract: The paper extends previous analysis of closed-economy inflation targeting to a small open economy with forward-looking aggregate supply and demand, and with stylized realistic lags in the different transmission channels for monetary policy. The paper compares targeting of CPI and domestic inflation, strict and exhibitable inflation targeting, inflation targeting instrument rules and the Taylor Rule, and inflation targeting and exchange-rate targeting. The paper also clarifies how a conditional inflation forecasts can be consistently constructed and used as an intermediate target variable when there are forward-looking expectations.
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Citations
Commodity price shocks and monetary policies in commodity exporting African countries - A DSGE analysis
TL;DR: This DSGE analysis investigates monetary policy rules in 5 African commodity-exporting countries, finding that nominal GDP targeting and inflation targeting are optimal policy rules for mitigating commodity price shocks' effects on output, prices, and exchange rates.
Inflation targeting in algeria: obstacles and opportunities
Azzeddine CHEDDAD,Mohammed Mékidiche +1 more
TL;DR: This study examines Algeria's inflation targeting feasibility, finding that the Bank of Algeria prioritizes interest rate smoothing over short-term economic stability, with its IT aspects dependent on economic setting and institutional architecture.
Optimal policy in rational expectations models: new solution algorithms
TL;DR: This paper developed methods to solve for optimal discretionary policies and optimal commitment policies in rational expectations models, which allow the optimization constraints to be conveniently expressed in second-order structural form, and are simple to apply.
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Asymmetric exchange rate policy in inflation targeting developing countries
TL;DR: In this article, the authors analyze central banks' interest rate decisions by estimating a nonlinear monetary policy reaction function using a panel threshold model and show that central banks in developing countries tolerate appreciation but fight against depreciation in order to hit their inflation targets.
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TL;DR: In this paper, a simple quantitative model of output, interest rate and inflation determination in the United States, and uses it to evaluate alternative rules by which the Fed may set interest rates.
Inflation Targeting: A New Framework for Monetary Policy?
TL;DR: Inflation targeting as discussed by the authors is a new strategy for monetary policy known as "inflation targeting," which has sparked much interest and debate among central bankers and monetary economists in recent years, characterized by the announcement of official target ranges for the inflation rate at one or more horizons, and explicit acknowledgment that low and stable inflation is the overriding goal of monetary policy.