volatility of output growth and inflation, although the magnitudes of these effects depend on the policy framework and the … inflation helps to moderate the volatility of output and inflation in the face of a volatile terms of trade. The same is true of … that focuses on low inflation is associated with lower volatility of imports. …

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. …