In this paper, I consider a simple model in which agents learn about the inflation target of a central bank over time by observing the policy instrument or inflation outcomes. Measuring credibility as the distance between the perceived target and the actual target, an increase in credibility is...

Uncertainty about the persistence of periods characterized by large price shocks is an important aspect of monetary policy. This type of uncertainty posed some difficulties for central banks in 2004. This paper formalizes the treatment of this type of uncertainty by solving an optimal control...

Over the past decade, questions over the impact of new information technologies on productivity growth trends have played an important role in the formulation of monetary policy, particularly in the United States and Canada. However, formal testing of whether the trend growth rate of aggregate...

We address robustness of inflation targeting rules in a New Keynesian model using two approaches. Firstly we use the Hansen-Sargent method, borrowed from the control theory literature, to design robust rules on the basis of the policymaker playing a game against malign nature. This welfare-based...

We study the implications of uncertainty for inflation targeting. We apply multiplicative uncertainty to a standard forward looking model and demonstrate Brainard's attenuation effect. But the result as monetary authorities become naturally more cautious at the same time monetary objectives are...

The central tenet of inflation targeting is the anchoring of inflation expectations. In this paper, we reexamine the role of key elements of the inflation targeting framework towards this end, in the context of an economy where economic agents have an imperfect understanding of the macroeconomic...