inflation rates in shaping the response of real exchange rates to shocks. We document two facts about inflation … rate is a poor predictor of future inflation rates. We estimate a medium-size DSGE open-economy model that accounts … that accounts for the dynamics of exchange rates and their covariance with inflation are disturbances to the foreign demand …

This paper deals with the relationship between inflation targeting and exchange rates. I address three specific issues …: first, I analyze the effectiveness of nominal exchange rates as shock absorbers in countries with inflation targeting. This … volatility is different in countries with an inflation targeting regime than in countries with alternative monetary policy …

output and the stability of inflation. In this context it is shown that exchange rate policies that seek to maintain real … exchange rates or competitiveness do stabilize output but do so at the cost of in-creased inflation instability. Exchange rate …

focusing inflation targeting that is implemented by a Taylor type rule, a rule that in equilibrium is reflected in the exchange … monetary can't deliver a stationary domestic price level. Another feature in the data for inflation targeting countries that is … direction from PPP in response to an 'inflation' shock - the 'bad news god news' result of Clarida -Waldman (2008;2014). This is …

stable inflation behavior will be generated -- is incorrect. This is because New Keynesian (NK) models are typically … consistent with the existence of RE paths with explosive inflation rates (in addition to one or more stable paths) that normally … imply the absence of explosive inflation. That result does not, however, justify negative conclusions about NK analysis. For …

This paper documents the evolution of long-run inflation expectations and models the stance of monetary policy from … 1965 to 1980. A host of survey-based measures and financial market data indicate that long-run inflation expectations rose … with a constant inflation goal, our analysis indicates that the path of policy can be characterized by a reaction function …

mechanically, buying and selling bonds in accordance with a Taylor policy rule based on expected inflation. In this setting we show … that stock market returns are much less than one-for-one related to inflation over a one-year holding period, which means …