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. …

empirical measures. Key Words: Cost-of-living, Consumer Surplus, Money Metric, Real Consumption, Welfare measurement …

into a "real part" due to the changes in quantities and an inflation due to the changes of prices. Examples are: real … derive these measures are largely unsatisfactory. The axiomatic theory of indexes does not make clear which economic problem …. For example, the theory of the CPI is usually developed for a single consumer with homothetic preferences and then applied …

Various papers have suggested that Price-Level targeting is a welfare improving policy relative to Inflation targeting …

Inflation-targeting central banks around the world often state their inflation objectives with regard to the consumer … sector suggests that CPI inflation is not always the best choice from a social welfare perspective. We revisit this issue in … multiple dimensions. With key parameters of the model estimated using data from an inflation targeting economy, namely Canada …