This paper considers the effects of changing expectations under macroeconomic policies that rely on targeting nominal variables, such as NGDP targeting. These proposals, in line with a dynamic conception of the equation of exchange, argue that the monetary authority can achieve any dynamic...

This paper compares the performance of simple inflation targeting (IT) and price-level path targeting (PLPT) rules to stabilize the macroeconomy, in response to a series of shocks, similar to those seen in Canada and the United States over the 1983 to 2004 period. The analysis is conducted in a...

We examine the relative ability of simple inflation targeting (IT) and price level targeting (PLT) monetary policy rules to minimize both inflation variability and business cycle fluctuations in Canada for shocks that have important consequences for global commodity prices. We find that...

In this paper, we investigate the effects of an anticipated future change in monetary policy regime in small open economies targeting either inflation or the exchange rate. The announcement of a future change in the monetary policy regime triggers an immediate change in the behavior of...

In this paper, we examine the extent to which monetary policy should respond to movements in sectoral inflation rates. To do this we construct a Generalised Taylor model that takes specific account of the sectoral make-up of the consumer price index (CPI). We calibrate the model for each sector...

To achieve their price stability objectives, many monetary authorities use the gap between current and potential output as an indicator of future price pressures. This policy-setting strategy has been criticized because potential output estimates have a high degree of uncertainty. In this paper,...

This paper argues that the IMF's traditional monetary conditionality - a ceiling on net domestic assets of the central bank and a floor on its net international reserves - should be adapted in IMF-supported adjustment programs with countries which have a framework of explicit inflation targets...

In this study, I modify the uncovered interest parity condition to account for foreign exchange interventions in the context of a small open economy. This is done in a framework of a semistructural New Keynesian model. I examine the case of Ukraine, which de facto transitioned to inflation...

We estimate a small structural model for inflation, the output gap, the domestic interest rate and the exchange rate for Hungary during the period of the transition (1991-1999). The transmission of monetary policy impulses to macro variables is characterized in a similar fashion to that of...

The evaluation of the output cost of monetary stabilization is one of the main macro questions to be addressed when comparing alternative strategies and paths to monetary convergence in the economies in transition. In general, the evaluation of the output costs of stabilization (and hence of the...