This note outlines a small, calibrated macromodel that can be used to support inflation targeting at Norges Bank. The model provides a stylised representation of the key flows in the macro economy, with a particular emphasis on the transmission mechanism of monetary policy. It can be viewed as...

Over the last decade monetary policy in Norway has gradually evolved from exchange rate targeting to flexible inflation targeting. In addition, globalization has affected the Norwegian economy substantially over the last decade. Monetary policy has increasingly been challenged on how to respond...