Open-economy inflation targeting

TL;DR: In this article, an optimal monetary policy for a small open economy with a flexible price sector and a sticky price sector is presented. But the optimal policy is to target sticky-price inflation, rather than a broad inflation measure.

TL;DR: In this article, a small open economy macroeconomic model where financial conditions influence aggregate behavior was developed to explore the connection between the exchange rate regime and financial distress and showed that fixed exchange rates exacerbate financial crises by tying the hands of the monetary authorities.

TL;DR: In this article, the authors consider generic Taylor-type rules, where the monetary authority reacts in response to output, inflation, and exchange-rate movements, and find that terms-of-trade movements do not contribute significantly to domestic business cycles.

TL;DR: In this article, it is argued that inflation targeting is best understood as a commitment to a targeting rule rather than an instrument rule, i.e., the equality of the marginal rates of transformation and substitution between the target variables.

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.

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.

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.

TL;DR: In this article, empirical evidence on money and output is presented, including the Tobin effect and the MIU approximation problems, and a general equilibrium framework for monetary analysis is presented.