In closed or open economy models with complete markets, targeting core inflation enables monetary policy to maximize … welfare by replicating the flexible price equilibrium. We analyze this result in the context of developing economies, where a … is high. We develop an open economy model with incomplete financial markets to show that headline inflation targeting …

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 …

Both interest rates and inflation rates in the Euro area have reached levels dangerously close to zero. By the strategy … argued that the inflation forecasts of the ECB are central for the communication strategy. In the current situation they …

the economy, when assuming that the monetary authority put higher weight on inflation stabilization than society. We … demonstrate that inflation-conservatism unambiguously leads to social welfare losses if the fiscal authority acts strategically …

In this paper we review and extend some of the key lessons that seem to be emerging from the Ramsey-inspired theory of … 'dynamic wedges'. Inflation, actual or anticipated, distorts these wedges in the present period, it shrinks the tax base and …