Exchange Rate Effects and Inflation Targeting in a Small Open Economy: A Stochastic Analysis Using FPS |
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Page 1
... exchange rate movements on the price of imported goods , results in lower variability in real output , nominal interest rates , the exchange rate and domestic price inflation . The result is robust if direct exchange rate effects ...
... exchange rate movements on the price of imported goods , results in lower variability in real output , nominal interest rates , the exchange rate and domestic price inflation . The result is robust if direct exchange rate effects ...
Page 13
... exchange rate movements . We do this by modifying the expression for inflation expectations that feeds into the Phillips curve so that it is a function of CPI inflation : π ; = ( 1 − y ) B ( L ) · π , ooi + y · C ( F ) · ñîïi - ( 5 ) ...
... exchange rate movements . We do this by modifying the expression for inflation expectations that feeds into the Phillips curve so that it is a function of CPI inflation : π ; = ( 1 − y ) B ( L ) · π , ooi + y · C ( F ) · ñîïi - ( 5 ) ...
Page 14
... exchange rates have levels or expectations effects Levels effects from exchange Expectations effects from rate movements exchange rate movements Targets nepi Targets л Targets Pi Targets л REAR 3 π 1.50 1.36 ** 1.42 1.32 ** περί 1.13 ...
... exchange rates have levels or expectations effects Levels effects from exchange Expectations effects from rate movements exchange rate movements Targets nepi Targets л Targets Pi Targets л REAR 3 π 1.50 1.36 ** 1.42 1.32 ** περί 1.13 ...
Common terms and phrases
1.30 RMSD INFLATION Actually Actually Actually autoregressive process base-case version CPI inflation targeting deviations of inflation direct exchange rate domestic inflation targeting domestic price inflation effects influence agents efficient frontier exchange rate effects exchange rate movements expectations effects expectations of generalised expectations process foreign sector generalised inflation import prices inflation and output inflation in domestic inflation reduces inflation targeting regimes inflation variability inflation versus influence inflation expectations instrument variability key macro variables less variability level effects lower variability maximise model economy monetary authority monetary authority's monetary policy nominal interest rates outcome under CPI output variability Phillips curve policy actions policy instrument policy reaction function policy rules considered price inflation targeting private agents projected deviations rate effects influence real output Reserve Bank results presented RMSDs in year-over-year shocks small open economy stochastic experiments targeting domestic price targeting horizon temporary disturbances variability in real version of FPS year-over-year CPI inflation Zealand περί