03847nam 2200625Ia 450 991081753520332120200520144314.01-4623-9512-01-4527-1778-897866128431671-4518-7248-81-282-84316-8(CKB)3170000000055184(EBL)1608142(SSID)ssj0000940714(PQKBManifestationID)11528525(PQKBTitleCode)TC0000940714(PQKBWorkID)10956001(PQKB)10898361(OCoLC)680613543(IMF)WPIEE2009101(MiAaPQ)EBC1608142(EXLCZ)99317000000005518420041202d2009 uf 0engur|n|---|||||txtccrWhat should inflation targeting countries do when oil prices rise and drop fast? /prepared by Nicoletta Batini and Eugen Tereanu1st ed.[Washington D.C.] International Monetary Fund20091 online resource (34 p.)IMF working paper ;WP/09/101Description based upon print version of record.1-4519-1678-7 Includes bibliographical references.Contents; I. Introduction; Tables; 1. Oil Price Developments; II. Relevant Literature; III. Methodology, Data and Calibration; IV. Optimal Policy Responses and Optimal Horizons to a 2000s-Type Supply Shock; A. Optimal Policy Responses under a 2000s-Type Oil Shock; 2. Welfare Statistics-Various Oil Regimes; B. Optimal Horizons for a 2000s-Type Oil Shock; 3. Optimal Policy Horizons Under Alternative Oil Regimes; 4. Optimal Policy Horizons Under Alternative Oil Regimes (α = 0.3); V. Optimal Rules Under Imperfect Credibility; 5. Optimal Feedback Horizons Under Alternative Oil RegimesVI. Bracing for Future ShocksVII. Concluding Remarks and Policy Implimentations; 6. Optimized Feedback Coefficients Under Three Alternative Future Oil Scenarios; ReferencesAfter a long period of global price stability, in 2008 inflation increased sharply following unprecedented increases in the price of oil and other commodities, notably food. Although inflation remained lower and growth higher in inflation targeting countries than elsewhere, almost everywhere price stability seemed in jeopardy as consumer prices kept surging and central banks struggled to maintain expectations anchored. The rapid drop in energy and food prices that later accompanied the world slowdown helped avert the worse, but inflation stayed high in many inflation targeting countries. This paper uses a small open-economy DSGE model to design the correct monetary policy response to a protracted supply shock of the kind observed today, and explains how to choose optimal policy horizons under such shock. Using a version of the model with Kalman learning, the paper also evaluates the implications of a loss of target credibility, showing how rules must be adjusted when the authorities' commitment to low inflation has been eroded. The appropriate response to future evolutions of the price of oil, including to a large downward correction as recently observed, is also evaluated.IMF working paper ;WP/09/101.Petroleum productsPricesInflation (Finance)Petroleum productsPrices.Inflation (Finance)332.152Batini Nicoletta1655456Tereanu Eugen1660811MiAaPQMiAaPQMiAaPQBOOK9910817535203321“What Should Inflation Targeting Countries Do When Oil Prices Rise and Drop Fast?”4016291UNINA