This paper explores the role of exchange rates in emerging economies with inflation-targeting regimes, an issue that … has become especially germane during the current episode of financial turmoil and volatile capital flows. Under inflation … targeting, the interest rate is the main monetary policy tool for influencing activity and inflation, and there is little …

This paper shows that the response of inflation to external shocks is very different when the authorities target the … would have no effect on the steady-state inflation rate under a fixed exchange rate are either inflationary or deflationary …

a freely floating exchange rate, an explicit target for inflation, and a mechanism than ensures a stable government debt … domestic and CPI inflation targeting interest rate rules alongside a 'Structural Surplus Fiscal Rule' as followed recently in … Chile. A comparison with a fixed exchange rate regime is made. We find that domestic inflation targeting is superior to …

, and inflation. The authors develop a framework that emphasizes the different roles of monetary and fiscal policy and apply …

. When the credibility of policymakers’ commitment to low inflation is firm, some degree of dirty floating, with little or no …

) has been to raise inflation targets to provide more room for policy rate easing during crises. This paper addresses a … different issue: the relationship between inflation and welfare. The literature is surveyed and a model is developed. A key … conclusion is that an increase in inflation targets gives rise to additional welfare costs, even after the extra room to maneuver …

considers inflation targeting in a small open economy. This economy is characterized by imperfect competition and short … inflation targeting on output and inflation volatility depend crucially on the exchange rate regime and the inflation index … nominal shocks the reverse is true. Second, domestically generated inflation targeting is preferable to CPI inflation …