Good monetary policy is both simple and complicated. The principles for good monetary policy are simple: Perform flexible inflation targeting, which means aiming to stabilize inflation around an explicit low positive numerical inflation target with some weight also on stabilizing the output gap, that is, stabilizing output around a measure of potential output. Because of the lags between moneta...

The Great Inflation of the 1970s was an international phenomenon. We study whether monetary authorities in the G7 countries were changing their responses to inflation in a similar manner during and following the Great Inflation era. Our results suggest that the common to the G7 countries inflation pattern during the Great Inflation period is associated with a common pattern in the monetary poli...

I develop an extension of the standard New Keynesian model to monetary policy regime switching to study the impact of uncertainty around the future inflation target. First, I fully characterize how the responses of current inflation and output to inflation target uncertainty depend on the monetary policy rule. If monetary policy is passive, inflation may increase far beyond the anticipated incr...

a r t i c l e i n f o Whether central banks place the same weights on positive and negative deviations of inflation and of the output gap from their respective targets is an interesting question regarding monetary policy. The literature has sought to address this issue using a specific asymmetric function, the so-called Linex loss function. However, is the Linex an actually asymmetric specifica...

the study of the role of money in the economy of developing countries, and its impact on economic variables, analysis of monetary policies, and other related issues are of paramount importance in economic planning. considering the above-mentioned points and also the realities of iranian economy, it is quite vital to scientifically specify the long-term trend of money supply through investigatio...

In the 1990s, a number of countries adopted explicit inflation targets as the goal of monetary policy, following the example of New Zealand and Canada.1 The targets were introduced to make more concrete the authorities’ commitment to achieve and maintain low rates of inflation in their economies. This paper provides a brief overview of the inflation-targeting programs of four countries—New Zeal...

During the past two decades, maintenance of low inflation, “price stability,” has become the principal focus of central banks around the world. At the same time, the view has emerged that monetary policy is better suited than fiscal policy for short-run stabilization purposes. This paper examines to what extent monetary policy can be directed at both “monetary stabilization,” stabilizing inflat...

concept of inflation compensation. Finally, we provide evidence that Federal Reserve communication and surprises in monetary policy actions bear on the uncertainty surrounding the expected rate of inflation. For one concept of inflation expectations, we find that Federal Reserve communication reduces uncertainty about the future rate of inflation, while surprises in monetary policy actions incr...