In this paper, stochastic simulations of the Reserve Bank of New Zealand’s new macroeconomic model, FPS, are used to examine the issue of which price index should monetary policy stabilise in a small open economy. Under the class of policy rules considered, targeting a measure of domestic inflation, which does not include the direct effects of exchange rate movements on the price of imported go...

This paper focuses on monetary and exchange rate policies in Colombia, with particular emphasis over the period 1999-2002, when flotation of the peso/dollar and inflation targeting were adopted. We argue, first, in favor of adopting “operational inflation ranges”, once inflation has been brought down to one digit over the last four years, and, secondly, in favor of strengthening the current sch...

This article analyzes the recent conduct of monetary and exchange rate policies in the Czech Republic. The Czech Republic entered 1993 as a newly independent country. It has introduced inflation targeting and floating exchange rate regime. The multidimensional nature of the inflationtargeting definition explains why there is no consensus about whether or not it should be employed. However, the ...

One of the main issues in international finance is the ratio of exchange rate pass through to consumer prices. The main objective of this study is to examine the exchange rate fluctuations and its asymmetric effect on consumer prices in Iran’s economy. In the present study, the effects of positive and negative impacts of the exchange rate on inflation rate and other macroeconomic variables of I...

there are various causes for inflation in macroeconomics. one of the important channels of experiencing inflation is through the international economy caused by external shocks. in this context, the impact of exchange rate volatilities on domestic prices known as exchange rate pass-through (erpt) plays a vital role. the present paper deals with the impact of exchange rate pass-through on inflat...

This paper offers new insights into the nature of exchange rate pass through modelling in the context of a Markov regime-switching environment. Using New Zealand data, the results indicate that pass through to import prices resulting from fluctuations in the exchange rate or exporter costs can be characterised as regime-specific. Furthermore, there is evidence that the probability of switching ...