In an open economy inflation-targeting framework, whether policy-makers should target aggregate or non-traded inflation … inflation process that the paper suggests have occurred over the past two decades: the effect of exchange rate changes on … inflation appears to have become more muted and the inflation process appears to have become better anchored. …

Several recent papers have explored the possibility that inflation-targeting central banks in small open economies pay … transient effects on inflation could be counterproductive. Accordingly, we investigate whether the Reserve Bank of Australia …, while ultimately concerned with aggregate inflation and output, should set short-term interest rates on the basis of …