Lessons from Inflation Targeting in New Zealand
In: Inflation Targeting: Desing, Performance, Challenges
AbstractThis paper uses the Reserve Bank of New Zealandâs model to combine a macroeconomic evaluation of the performance inflation targeting with an analysis of policy rules. The questions to answer are two: (i) what lessons can be obtained from the shocks that have been experienced and the response given to them?, and, (ii) which is the optimal response to different types of shock?. The model allows to treat some issues of interest for the implementation of this scheme, like the flexibility of the inflation target (which depends on the degree of credibility of the monetary authority), the optimal policy horizon (a intermediate horizon seems to achieve the best combination of inflation volatility and output) and the bandwidth (which implies a trade off between output volatility and inflation).
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This chapter was published in: Norman Loayza & Raimundo Soto & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.) Inflation Targeting: Desing, Performance, Challenges, , chapter 12, pages 501-538, 2002.
This item is provided by Central Bank of Chile in its series Central Banking, Analysis, and Economic Policies Book Series with number v05c12pp501-538.
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- Andrzej Toroj, 2011. "Competitiveness channel in Poland and Slovakia: a pre-EMU DSGE analysis," National Bank of Poland Working Papers 86, National Bank of Poland, Economic Institute.
- Ralf Fendel, 2004. "Perspektiven und Grenzen der Verwendung geldpolitischer Regeln," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 5(2), pages 169-192, 05.
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