The authors analyze the extent to which inflation-targeting frameworks should incorporate flexibility in order to respond to asset-price misalignments and other atypical events. They examine the costs and benefits of adding flexibility to the Bank's current inflation-targeting framework, and...

The conduct of monetary policy within an inflation-targeting framework requires the establishment of an inflation-target horizon, which is the average time it takes inflation to return to the target. Policy-makers have an interest in communicating this horizon, since it is likely to help anchor...

Of particular concern to monetary policy-makers is the considerable unreliability of financial variables for predicting GDP growth and inflation. As Stock and Watson (2003) find, some financial variables work well in some countries or over some time periods and forecast horizons, but the results...

An important challenge facing central banks is making decisions under uncertainty about the dynamic effects of monetary policy actions. The authors stress the importance of explicitly recognizing uncertainty about the transmission mechanism when formulating policy advice. They argue that one way...

The paper examines the effects of measurement error on a well-known causality-testing procedure, that due to Pierce and Haugh. This is shown to be extremely sensitive to small random variations, which may induce the appearance of, as well as obscure, causality patterns, through causing...

We discuss and reconcile the geological and economic/technological views concerning the future of world oil production and prices, and present a nonlinear econometric model of the world oil market that encompasses both views. The model performs far better than existing empirical models in...