reduce the budget deficit and lower the underlying rate of inflation. The paper develops an input-output model to investigate …

fixes, a reasonably durable regime. However, most of the new stability is due to countries that float with an inflation … target. Though a few have left to join the Eurozone, no country has yet abandoned an inflation targeting regime under duress …. Inflation targeting now represents a serious alternative to a hard exchange rate fix for small economies seeking monetary …

which exchange rate sensitive collateral constraints may bind in some states of the world. The appeal of the model is that …

Korea has adopted much of the apparatus of inflation targeting, with a band for target inflation and a Monetary Policy … trade and investment as Korea, currency movements contain information useful for forecasting inflation and the output gap … information relevant for the inflation forecast. In addition, the central bank responds to movements in the exchange rate for …

policymaker to deviate from strict domestic price stability. With both consumption and production openness variations in the world … price of food and in the world price of imported oil act as exogenous cost-push factors. …