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Monetary policy under inflation targeting: an introduction
With the end of intermediate exchange rate regimes, countries are either abandoning domestic monetary policy (by choosing super-hard pegs or relinquishing their national currencies altogether) or strengthening independent monetary policymaking (by adopting floating exchange rates, of either the clean ...
Monetary policy under uncertainty and learning: an overview
Central bank economists and academic economists conducting research on the design of monetary policy have made significant advances in recent years. This work has led to a clearer understanding of the desirable properties of interest rate rules, the role of announcements and communication, and the ...
Optimal monetary policy in a small, open economy: a general-equilibrium analysis
The two central issues in monetary policy are separated by time horizon. The first relates to the short run: what is the appropriate monetary policy across the business cycle? The second relates to the long run: waht is the optimal long-run rate of inflation? This paper explores these classic issues ...
Response to external and inflation schocks in a small open economy
Monetary policy design has experienced major changes over the last twenty years. These changes had their origin in changes in macroeconomic theory, a better understanding of the importance of achieving and maintaining low inflation, and the abandonment of fixed pegs in favor of floating exchange rate ...
Inflation target transparency and the macroeconomy
Over the last twenty years, many central banks have adopted increasing standards of transparency in communicating their monetary policy objectives, in particular regarding the explicit definition and quantification of their price stability objective or inflation target. One important benefit of increased ...
Optimal monetary policy rules under inflation range targeting
Central banks resort to a variety of alternative arrangements in formulating, conducting, and communicating monetary policy. One increasingly popular type of arrangement is based on a target range for inflation. In this setup the conduct of monetary policy is oriented to keeping inflation withing ...
Learning, endogenous indexation, and disinflation in the new-keynesian model
Developing a better understanding of the costs of disinflation has long been an important objective for macroeconomic research. Since the 1980s, disinflation episodes and strategies have been studied extensively under the assumption of rational expectations. This assumption implies that central bank ...
Indexation, inflation, and monetary policy: an overview
Indexation policies and practices are common in many markets and economies. In most cases, price adjustment mechanisms arise in private contracts as a consequence of high and pervasive inflation. Sometimes governments also play an important role in promoting the use of indexation in their issues of ...
Transparency, flexibility, and inflation targeting
Three parallel and certainly not independent changes have occurred in central bank practices over the past fifteen years. The first is the spread of central bank independence, which is tied to the notion that even when the government plays a role in setting the goals of monetary policy, central banks ...
Inflation targeting and the anchoring of inflation expectations in the Western hemisphere
Many central banks have adopted a formal inflation-targeting framework based on the belief and the theoretical predictions that an explicit and clearly communicated numerical objective for the level of inflation over a specified period would, in itself, be a strong communication device that would help ...