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. …

output, aggregate demand, and inflation to an increase in commodity price are magnified when these rules are imperfectly … volatility. Also, our results indicate that having an explicit fiscal rule and an inflation targeting regime contribute to …

output, aggregate demand, and inflation to an increase in commodity price are magnified when these rules are imperfectly … volatility. Also, our results indicate that having an explicit fiscal rule and an inflation targeting regime contribute to …

overshooting their new equilibrium values in response to a money supply shock, and the deviation of commodity prices from their … equilibrium values having explanatory power for subsequent consumer price inflation …