Series: IMF Working Papers
Author(s): Rahul Anand , and Eswar Prasad
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 September 2010
Keywords: Monetary Policy Framework, Core Inflation, Headline Inflation, Financial Frictions, Liquidity Constraints, aggregate demand, central bank,
In models with complete markets, targeting core inflation enables monetary policy to maximize welfare by replicating the flexible price equilibrium. We develop a two-sector two-good new-Keynesian model to study the...