Pacific Islands countries are vulnerable to commodity price shocks, and this poses challenges to monetary policy. The high degree of exchange rate pass-through to headline inflation and the weak monetary transmission mechanism in PICs suggest a greater efficacy of exchange rate changes in...

Commodity price volatility can create concern for central bank policy-makers. Recent commodity prices peaked in the aftermath of the financial crisis of 2007, and they have remained relatively volatile since. As they are often seen as being connected in a cause and effect relationship with...

Commodity price fluctuations in recent years have led to wide swings in inflationary pressures across Asian emerging market economies and have revived the discussion on how monetary policy should best react. We argue that the conventional wisdom for emerging market economies of treating...

In this paper, we analyze how lack of credibility and transparency of monetary and fiscal policies undermines the effectiveness of macroeconomic policies to isolate the economy from commodity price fluctuations. We develop a general equilibrium model for a commodity-exporting economy where macro...