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.
read more
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.
read more
Chat with Paper
AI Agents for this Paper
Find similar papers on Google Scholar, PubMed and Arxiv
Write a critical review of this paper
Analyze citations of this paper to find unaddressed research gaps
Citations
An Analytical Solution for the Interest Rate Reaction Function in a Neo- Keynesian Economy Using the Undetermined Coefficients Method
TL;DR: In this article, the undetermined coefficients method is used to solve the Central Bank optimization problem in a neo-keynesian economy, and the advantage of using this method is that it provides a theory as to how rational expectations are constructed, and how shocks in the economy are propagated, in order to find an analytical solution for the interest rate reaction function in an economy with a forward-looking behavior.
Identifying Sources of Macroeconomic and Exchange Rate Fluctuations in the UK
TL;DR: The authors used a stylised, open-economy, structural VAR model to identify the types of shocks responsible for macroeconomic fluctuations in the UK economy using quarterly data for the period 1985:1-2009:1.
•Posted Content
A Monetary Policy Model Without Money for India
TL;DR: A New Keynesian model estimated for India yields valuable insights as discussed by the authors, showing that aggregate demand reacts to interest rate changes with a lag of at least three quarters, with inflation taking seven quarters to respond.
An Alternative Explanation of the Price Puzzle
TL;DR: In this article, the authors propose a simple explanation for the frequent appearance of a price puzzle in VARs designed for monetary policy analysis and suggest that the best method of solving the puzzle implies a close connection between theory and empirics rather than the introduction of a commodity price.
References
Discretion versus policy rules in practice
TL;DR: In this article, the authors examine how recent econometric policy evaluation research on monetary policy rules can be applied in a practical policymaking environment, and the discussion centers around a hypothetical but representative policy rule much like that advocated in recent research.
Staggered prices in a utility-maximizing framework
TL;DR: In this article, the authors developed a model of staggered prices along the lines of Phelps (1978) and Taylor (1979, 1980), but utilizing an analytically more tractable price-setting technology.
9.1K
The Optimal Degree of Commitment to an Intermediate Monetary Target
TL;DR: In this article, it is shown that the ideal central bank should place a large, but finite, weight on inflation, and a new framework for choosing among alternative intermediate monetary targets is proposed.
4K
An Optimization-Based Econometric Framework for the Evaluation of Monetary Policy
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.