This paper studies monetary policy rules in a small open economy with Inflation Targeting, incomplete pass-through and …

The paper examines the factors of global inflation acceleration in 2021-2022. We consider primarily the developed … economies, where rates of inflation over the last two years have exceeded multi-year highs and have significantly exceeded … target levels. We find that the cause of accelerating inflation was an imbalance between aggregate demand, which started to …

In models with complete markets, targeting core inflation enables monetary policy to maximize welfare by replicating … stabilize price movements in the flexible price sector. Also, in the presence of financial frictions, stabilizing core inflation … frictions a welfare-maximizing central bank should adopt flexible headline inflation targeting a target based on headline rather …

Over the last quarter of a century, inflation targeting has become a popular monetary regime. Nevertheless, empirical … decision and thus needs to be properly instrumented. In this paper, we show that preferences over inflation constitute a … crucial determinant of IT: countries exhibiting greater inflation aversion are more likely to adopt IT …

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. …

This study analyses the aspect of inflation expectations management in the context of inflation targeting by … particularly focusing on the impact of exchange rate pass-through to inflation expectations in a small open economy. We also … augment the inflation expectations function with GDP, inflation, unemployment, fiscal stance, oil prices, and money supply …

This paper provides some empirical estimates on how tightly is it feasible to control inflation in a very small open … inflation and output variability that are achievable under a range of alternative monetary policy rules. These frontiers … illustrate that inflation stabilization is more challenging in Iceland than in other industrial countries primarily because of …

determinant of the monetary transmission mechanism, namely the degree of persistence characterising the inflation process. The … types of staggered contracts specifications which induce quite different degrees of inflation persistence. The paper shows … that inflation persistence is high when uncertainty about the prevailing degree of inflation persistence is pervasive …

help anchoring inflation expectations. We use survey data on long-term inflation expectations in 15 industrial countries … since the early nineties to investigate how well anchored are inflation expectations. We find that in all countries except … Japan long-term inflation expectations are well anchored and, generally, increasingly so over the past decade. When …

a rationale for the practice of inflation zone targeting. We show that the presence of either zone-quadratic preferences … or a zone-linear relationship between inflation and economic activity provides strong incentives to deviate from … structure and relative preference towards economic stability in determining the width of the implied targeted inflation zone …