The mainstream inflation-targeting literature makes the strong assumption that the central bank can exactly target the interest rate which affects investment and consumption decisions and hence the money supply plays no role in the monetary policy strategy. This assumption is equivalent to...

Inflation scenarios in forecasts of the Central Bank of Iceland (CBI) appear to converge to the inflation target (2.5%) in 8-9 quarters. We ask whether this is a coincidence or an inherent property of the CBI’s model, QMM. We formulate a sub-model, containing equations for inflation, inflation...

This paper explores some recent challenges for the inflation targeting. The circumstances are different for the emerging market countries and for the industrialized ones. In many emerging market countries the central banks adopted more or less formally the inflation targeting, in order to gain...

The standard new Keynesian monetary policy problem is, in its original presentation, a linear model. As a result, only three possibilities are admissible in terms of long term dynamics: the equilibrium may be a stable node, an unstable node or a saddle point. Fixed point stability (a stable...

The Israeli Economy has served as a laboratory for the study of inflation and government policy reponse. In periods crucial for Israel's experience of inflation, finance ministers were replaced frequently, often changing their predecessors' policies, much to the detriment of inflation. Inflation...

The paper shows the advantages and handicaps of implementing an inflation target (IT) regime, from a Post-Keynesian and, thus, an institutional stance. It is Post-Keynesian as long as it does not perceive any benefit in the mainstream split between monetary and fiscal policies. And it is...