policy makers to analyse all relevant information in order to undertake effective policy actions. Inflation targeting has … enabled countries to achieve low inflation in the very short term. Due to this, the financial markets have adjusted their long …-term inflation expectations and incorporated them into the interest rate. Risk premiums that compensate for the uncertainty of …

interest rate is set as a function of the deviation of the inflation rate from its target rate, the output gap, and Tobin's q …

fragility of leveraged firms in its pursuit of inflation-targeting interest rate policies. This paper develops a small …