Article ID Journal Published Year Pages File Type
5055106 Economic Modelling 2012 10 Pages PDF
Abstract
► We incorporate habit formation into intertemporal consumption decision. ► We modify the Calvo price setting to include indexation to past inflation. ► Full stabilization of domestic prices or the output gap is not optimal policy. ► Flexible CPI inflation targeting performs better than three alternative rules.
Keywords
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
Preview
Optimal monetary policy in a small open economy with inflation and output persistence
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