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. …

This paper investigates the merits of aggregate inflation targeting compared with non-traded inflation targeting using … inflation target than for a flexible non-traded inflation target. However, in response to demand and supply shocks monetary … policy is more activist for a flexible non-traded inflation target. The result is robust to the inclusion of forward …

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 …

Long-term nominal interest rates in a number of inflation-targeting small open economies have tended to be highly …

information about inflation expectations – that survey measures of expectations are inconsistent with rational expectations, but … less so for financial markets than households; that actual and expected inflation interact with each other; and that the … foreign exchange market anticipates tighter monetary policy when inflation is higher than expected. The second half of the …

Historical experience shows that disruptions in credit markets can have a material impact on activity and inflation …