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Inflation Targeting : Theory and Policy Implications

Green, J. H. - 1996

As with many monetary policy frameworks, inflation targeting is subject to the well-known problem of inflation bias. With inflation targeting, however, the bias becomes apparent not as inflation above desired levels, but as a wedge between the announced target and observed inflation. This...

Persistent link: https://www.econbiz.de/10014398141

Incorporating Financial Stability in Inflation Targeting Frameworks

Aydin, Burcu - 2011

The global financial crisis has exposed the limitations of a conventional inflation targeting (IT) framework in insulating an economy from shocks, and demonstrated that its rigid application may aggravate the effect of shocks on output and inflation. Accordingly, we investigate possible...

Persistent link: https://www.econbiz.de/10014398317

Disinflation, external vulnerability, and fiscal intransigence : some unpleasant Mundellian arithmetic

Tanner, Evan - 2017

cooperate-a case of fiscal intransigence-central banks that pursue a disinflation on a 'go it alone' basis will cause the …

Persistent link: https://www.econbiz.de/10011704524

Credibility dynamics and disinflation plans

Kostadinov, Rumen; Roldán, Francisco - 2020

We study the optimal design of a disinflation plan by a planner who lacks commitment. Having announced a plan, the …. When announcing the disinflation plan, the planner takes into account these anticipated interactions. We find that, even in … the zero reputation limit, a gradual disinflation is preferred despite the absence of inflation inertia in the private …

Persistent link: https://www.econbiz.de/10012251953

Expectations' anchoring and inflation persistence

Bems, Rudolfs; Caselli, Francesca; Grigoli, Francesco; … - 2018

Understanding the sources of inflation persistence is crucial for monetary policy. This paper provides an empirical assessment of the influence of inflation expectations' anchoring on the persistence of inflation. We construct a novel index of inflation expectations' anchoring using survey-based...

Persistent link: https://www.econbiz.de/10011978669

Fix vs. float : evaluating the transition to a sustainable equilibrium in Bolivia

González, Andrés; Jafarov, Etibar; Rodríguez, Diego; … - 2022

Bolivia has achieved noteworthy success over the past 15 years in raising incomes, reducing poverty, and maintaining macroeconomic stability by deploying commodity revenues to finance transfers, public investment, and state-led development, using an exchange rate peg as a policy anchor. However,...

Persistent link: https://www.econbiz.de/10013170086

Money-Based Versus Exchange-Rate-Based Stabilization : Is there Space for Political Opportunism?

Aisen, Ari - 2004

In response to high and chronic inflation, countries have adopted different stabilization policies. However, the extent to which these stabilization programs were designed for political motives is not clear. Since exchange-rate-based stabilizations (ERBS) create an initial consumption boom...

Persistent link: https://www.econbiz.de/10014401223

Optimal monetary policy under bounded rationality

Benchimol, Jonathan; Bounader, Lahcen - 2019

The form of bounded rationality characterizing the representative agent is key in the choice of the optimal monetary policy regime. While inflation targeting prevails for myopia that distorts agents' inflation expectations, price level targeting emerges as the optimal policy under myopia...

Persistent link: https://www.econbiz.de/10012102200

Hybrid Inflation Targeting Regimes

García, Carlos José - 2009

This paper uses a DSGE model to examine whether including the exchange rate explicitly in the central bank''s policy reaction function can improve macroeconomic performance. It is found that including an element of exchange rate smoothing in the policy reaction function is helpful both for...

Persistent link: https://www.econbiz.de/10014402265

Financial Frictions and Sources of Business Cycle

Taheri Sanjani, Marzie - 2014

This paper estimates a New Keynesian DSGE model with an explicit financial intermediary sector. Having measures of financial stress, such as the spread between lending and borrowing, enables the model to capture the impact of the financial crisis in a more direct and efficient way. The model...

Persistent link: https://www.econbiz.de/10014411687