Inflation Targeting and the Inflation Process: Some Lessons from an Open Economy

Guy Debelle () and Jenny Wilkinson
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Jenny Wilkinson: Reserve Bank of Australia

RBA Research Discussion Papers from Reserve Bank of Australia

Abstract: In an open economy inflation-targeting framework, whether policy-makers should target aggregate or non-traded inflation depends on the structural relationships in the economy. This paper shows that in a small empirical model of the Australian economy, it makes little difference which measure is targeted. This conclusion is reinforced by the significant changes to the inflation process that the paper suggests have occurred over the past two decades: the effect of exchange rate changes on inflation appears to have become more muted and the inflation process appears to have become better anchored.

Keywords: exchange rates; inflation targeting; monetary policy (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2002-01
New Economics Papers: this item is included in nep-ifn, nep-lam and nep-mon
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:rba:rbardp:rdp2002-01

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