We study a model with repeated moral hazard where financial contracts are not fully indexed to inflation because … economies with higher price-level uncertainty are less vulnerable to a price shock of a given magnitude, that is, aggregate …

inflation and output dynamics in the United States. In particular, I find that real money balance effects are quantitatively … shock and the supply side effects of monetary policy. Second, the existence of real money balance effects causes higher …

theory, it should result in reduced conditional uncertainty because investor expectations would be formed with a superior …

global inflation. The process of globalization has motivated much debate over whether global factors have become more … important in driving the inflation process. Since commodity prices respond to global demand and supply conditions, they are a … potential channel through which foreign shocks could influence domestic inflation. The author assesses whether commodity prices …

of inflation lower than 2 per cent, and whether economic welfare might be improved by moving from an inflation …

optimally targets nominal income growth (NIT) or the change in the output gap (SLT) outperforms a regime that targets inflation … precommitment. The author obtains a very different result when the analysis is extended to open-economy models. Flexible CPI-inflation … targeting outperforms both SLT and NIT and is the most robust targeting regime. The gains from targeting CPI inflation are …

little attention has been paid to the idea. In this paper, we build on Svensson’s (1997) inflation targeting framework by … case without it. This result suggests that the central bank and/or the government should set a relatively high inflation … targeting a positive inflation rate in the long-run. …

are already high. By contrast, upward pressures on output (and perhaps also on inflation) should lead to decreases in …, responding to future inflation, rather than the current rate, does not generate significant welfare improvements. While some of … should lower rates when output or inflation is pushing upward is more specific to limited-participation models. This …

inflation. The analysis extends Elwood’s (1998) framework by incorporating in the model an inflation-threshold process that can …, depending on the level of inflation: negative shocks are more detrimental when inflation is high, and positive shocks are more … persistent when inflation is low. …