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Nominal Exchange Rate Shocks and Inflation in an Open Economy: Towards a Structuralist Inflation Targeting Agenda

University of Greenwich

Room Hamilton House, room HH103, Old Royal Naval College, Park Row, London SE10 9LS
22 Feb 2018 4 p.m. – 5 p.m.

Research Seminar by Eduardo Bastian (Institute of Economics, Federal University of Rio de Janeiro, Brazil). Chaired by Professor Ozlem Onaran (FEPS Scientific Council member and Director of GPERC).

Abstract

This paper develops a model of inflation in an open economy. The model permits analysis of the susceptibility of open economies to permanent inflationary consequences arising from transitory foreign exchange shocks. Sources of structural vulnerability to such events are identified, and means of addressing these structural vulnerabilities are discussed. Ultimately, the paper arrives at a “structuralist inflation targeting agenda”. Based on a proper conception of inflation dynamics, this involves “getting inflation targeting right” rather than either accepting mainstream inflation targeting prescriptions or simply neglecting inflation altogether.

Paper available here


Organising committee

Co-organised by the Foundation for European Progressive Studies (FEPS) and GPERC.