In closed or open economy models with complete markets, targeting core inflation enables monetary policy to maximize … is high. We develop an open economy model with incomplete financial markets to show that headline inflation targeting … headline inflation, assigns zero weight to import prices. …

This paper studies monetary policy rules in a small open economy with Inflation Targeting, incomplete pass-through and …

Over the last quarter of a century, inflation targeting has become a popular monetary regime. Nevertheless, empirical … decision and thus needs to be properly instrumented. In this paper, we show that preferences over inflation constitute a … crucial determinant of IT: countries exhibiting greater inflation aversion are more likely to adopt IT …

solutions, all have failed as these attempts implicitly assume perfectly-correct inflation statistics. Examining these … assumptions, we discover that not only are the inflation numbers materially flawed, but more so, there are significant incentives … for government entities to under-report inflation. With this, we find that to explain the Equity Premium Puzzle, inflation …

inflation. Previous studies, which assume a constant degree of price rigidity across inflation regimes, find two time consistent … equilibria - one with low inflation, the other with high inflation. In contrast, when price rigidity is endogenous, the high … inflation equilibrium ceases to exist. Hence, time consistent equilibrium is unique. This result depends on two features of the …

determinant of the monetary transmission mechanism, namely the degree of persistence characterising the inflation process. The … types of staggered contracts specifications which induce quite different degrees of inflation persistence. The paper shows … that inflation persistence is high when uncertainty about the prevailing degree of inflation persistence is pervasive …

a rationale for the practice of inflation zone targeting. We show that the presence of either zone-quadratic preferences … or a zone-linear relationship between inflation and economic activity provides strong incentives to deviate from … structure and relative preference towards economic stability in determining the width of the implied targeted inflation zone …

The inflation targeting policy, which is adopted in a lot of countries in recent years, has been introduced with a band … target in most countries. However, in the many theoretical analysis, the target of the inflation rate is assumed to be a … few. In this paper, to treat the above-problem, we make the inflation band targeting model which is based on Barro and …

Since the early 1980s, the United States economy has changed in some important ways: Inflation now rises considerably … less when unemployment falls and the volatility of output and inflation have fallen sharply. This paper examines whether … volatility of monetary policy reaction functions can account for most or all of the change in the inflation …