solutions such as the conservative central banker and optimal inflation contracts. Our theoretical model also shows how an … inflation targeting range should be set and how it should respond to changes in the nature of shocks to the economy …

In this paper, we examine the extent to which monetary policy should respond to movements in sectoral inflation rates … for different responses to inflation in different sectors outperforms a rule which just targets aggregate CPI, as does a … rule that responds only to non food and energy inflation. However, we find that the optimal sectoral rule only leads to a …