What Measure of Inflation Should a Developing Country Central Bank Target? PDF Download

Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download What Measure of Inflation Should a Developing Country Central Bank Target? PDF full book. Access full book title What Measure of Inflation Should a Developing Country Central Bank Target? by Rahul Anand. Download full books in PDF and EPUB format.

What Measure of Inflation Should a Developing Country Central Bank Target?

What Measure of Inflation Should a Developing Country Central Bank Target? PDF Author: Rahul Anand
Publisher: International Monetary Fund
ISBN: 1513597469
Category : Business & Economics
Languages : en
Pages : 37

Get Book Here

Book Description
In closed or open economy models with complete markets, targeting core inflation enables monetary policy to maximize welfare by replicating the flexible price equilibrium. We analyze this result in the context of developing economies, where a large proportion of households are credit constrained and the share of food expenditures in total consumption expenditures is high. We develop an open economy model with incomplete financial markets to show that headline inflation targeting improves welfare outcomes. We also compute the optimal price index, which includes a positive weight on food prices but, unlike headline inflation, assigns zero weight to import prices.