Incorporating Financial Stability in Inflation Targeting Frameworks

Preprint OPEN
Burcu Aydin; Engin Volkan;
(2011)
  • Subject: General (includes Measurement and Data), Financial Markets and the Macroeconomy, Monetary Policy, Central Banking, and the Supply of Money and Credit: General, [Financial stability;Monetary policy;DSGE, financial accelerator, inflation, central bank, monetary shock, Prices, Business Fluctuations, and Cycles]

The global financial crisis has exposed the limitations of a conventional inflation targeting (IT) framework in insulating an economy from shocks, and demonstrated that its rigid application may aggravate the effect of shocks on output and inflation. Accordingly, we inv... View more
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