Back Matter

Back Matter

Author(s):
Tobias Adrian, Douglas Laxton, and Maurice Obstfeld
Published Date:
April 2018
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    Index

    A

    • Accountability
      • of central banks, 114
      • feedback from, 258
      • transparency and, 114, 257–59
    • Acheson, K., 20n4
    • Ad hoc forward guidance, 34
    • Adrian, T., 70, 72, 74, 83, 87–88, 97–98, 100
    • Aggregate demand equation, core model and, 48
    • Alichi, A., 162n9
    • Allen, F. , 70n3
    • Amplification mechanisms, 91
    • Arrow-Debreu securities, 88–89, 91
    • Article IV, 252
    • Asian financial crisis, 157
    • Asset prices
      • shock absorption and, 144–46
      • shock amplification and, 146

    B

    • Balance sheets
      • central bank, 56f
      • of Federal Reserve, 66n17
    • Bank for International Settlements, 264
    • Bank of Canada, 3, 6, 9, 19, 21, 114, 124
      • conventional forward guidance used by, 142
      • Governor of, 131
      • history of, 119
      • on inflation, 260
      • inflation-forecast targeting of, 24, 134t
      • policy rates of, 130
    • Bank of England, 38
      • threshold rules of, 131
    • Bank of Israel, 40
    • Bank of Mexico, 59
    • Bank of Tanzania, 55
    • Barro, R., 17
    • Baseline event set, interest rates around, 215t
    • Battini, N., 39
    • Bayesian methodology, 50n2, 76
    • Beaupain, R., 65n16
    • Bech, M., 65n16
    • Below-target inflation, 35n3
    • Berg, A., 251
    • Bernanke, B. S., 20n3, 36n4, 71 n4, 98, 99, 216
    • Bernhardsen, T., 65n16
    • Bindseil, U., 62, 66
    • Blanchard, O., 70n3, 261
    • Blinder, A. S., 115
    • Bond yields, 123
    • Borio, C, 70n2
    • Boundary conditions, 197
    • Boyarchenko, N., 70, 83, 98
    • Brazil, 58–60
    • Bretton Woods system, 17
    • Brůha, J., 168
    • Brunnermeier, M. K., 71 n4, 99
    • Buiter, W., 66

    C

    • Calvo, G., 70n3
    • Canada, 8–9, 58–60, 114
      • alternative policy strategies in, 134–42
      • consensus inflation expectations for, 120f
      • conventional forward guidance in, 124, 128–30
      • effective lower bound in, 125n5
      • exchange rate in, 122f
      • expectations in, 126–28
      • fiscal policy in, 140
      • inflation expectations in, 121f
      • inflation for, 120f
      • inflation targeting in, 9n9
      • interest rates in, 122n3
      • model simulations and, 134–42
      • monetary policy in, 134–35
      • New Keynesian models for, 146–52
      • oil prices in, 122
      • stimulus in, 140
      • unconventional forward guidance in, 130–31, 133–34
    • Caruana, J., 70n2
    • Ceiling systems, of central banks, 60ni10
    • Central Bank of Chile
      • inflation-forecast targeting of, 24
      • interbank rates capped by, 57n5
    • Central banks, 3, 7
      • accountability of, 114
      • balance sheet, 56f
      • ceiling systems of, 60n10
      • communication programs of, 258
      • conventional forward guidance of, 129–30
      • GaR and, 89
      • goal independence of, 19n2
      • inflation-forecast targeting and, 108, 257n1
      • in inflation targets, 19–20
      • instrument independence of, 19
      • interest rates and, 27
      • in low-income countries, 241
      • mid-corridor system with policy rate attached to, 60, 61f
      • in non-inflation-targeting regimes, 257n2
      • objectives of, 257
      • on policy rates, 57
      • publication of forecasts, 109–11
      • short-term rates and, 57, 125
      • statement of record of, 108–9
      • in Sub-Saharan Africa, 250
      • understanding policies of, 20
    • Cerra, V., 70n3
    • Cerutti, E., 70n3
    • Chant, J., 20n4
    • Charbonneau, K., 132
    • Chile, 58–60
      • Monetary Policy Reports for, 109–10
    • China, 252, 262
    • Christensen, J. H. E., 65n16
    • Christiano, L. J. C, 99
    • Clinton, K., 6n6, 27n9
    • CNB. See Czech National Bank
    • Cochrane, J., 91
    • Coefficients, on financial conditions, 95
    • Coibion, O., 23
    • Commodity terms of trade, in New-Keynesian models, 151–52
    • Common media, communication and, 110
    • Communication
      • of central banks, 258
      • at CNB, 173–79
      • common media and, 110
      • costs of, 258
      • inflation-forecast targeting and, 112, 258
      • monetary policy and, 110
      • on Policy Rate Path, 129
      • in taper tantrum, 216
      • of uncertainty, 114–15
      • unconventional forward guidance and, 130
    • Composite rates, 58
    • Conditionality, 25
    • Conditional volatility, 92
    • Confidence bands, 8
      • CNB, 162n8
      • for federal funds rate, 227f
      • loss-minimizing strategies and, 226–30
      • for output gap, 229f
      • for PCE inflation, 228f
    • Constant Relative Risk Aversion (CRRA), 90n8
    • Consumer price index (CPI), 21, 85–86, 119
      • food prices in, 191–92
      • inflation, 124, 189
    • Contractionary shocks, inflation and, 127
    • Conventional forward guidance, 9, 34, 263
      • Bank of Canada using, 142
      • in Canada, 124, 128–30
      • of central banks, 129–30
      • inflation-forecast targeting and, 128
      • systematic publication and, 128–29
    • Core inflation, 22, 135, 136f, 139f, 141f, 143f
    • Core model
      • aggregate demand equation and, 48
      • equations, 48
      • expectations and, 50
      • Phillips curve and, 48–49
      • typical, 50
    • Core projection models, 24
    • Core-QPM
      • demand shocks and, 198–201
      • disinflation and, 198
      • equations, 194
      • monetary policy experiments, 197–201
      • supply shocks and, 201
    • Council of Economic Advisers, 123
    • Counterparties, 57
    • CPI. See Consumer price index
    • Credibility, 196
      • endogenous policy, 199f, 220n10
      • in India, 193
      • of inflation forecasting, 263–64
      • inflation targeting and, 255
      • perfect policy, 200f
      • policy, 144–45
      • shock absorption and, 37
      • stock, 202f, 203f, 204f
    • Credit allocation, Federal Reserve and, 63n14
    • Credit growth, 256
    • Crisis risk, interest rates and, 72–74
    • CRRA. See Constant Relative Risk Aversion
    • Curdia, V., 85, 99
    • Czech National Bank (CNB), 5, 10–11, 10n10, 19, 110, 120, 155
      • board responsibility at, 172
      • clarity of language of, 174
      • communications at, 173–79
      • confidence bands, 162n8
      • DSGE model, 167, 167n11
      • exchange rate instruments and, 176–79
      • forecast evaluation at, 171n16
      • FPAS, 163–73
      • full disclosure at, 174–79
      • human resource input at, 169–71
      • inflation-forecast targeting of, 24, 260
      • Inflation Report, 113, 172
      • inflation targeting by, 158
      • Macroeconomic Forecasting Division, 168
      • managed float, 157
      • modeling team at, 171n17
      • Monetary Department, 169–71, 172
      • organizational structure at, 169f
      • QPM-gap model, 165, 166f
      • senior management at, 170
      • staff, 170n15
      • stages of development, 164f
      • on tolerance band, 157
      • transparency of, 231n15
      • uncertainty and, 169
    • Czech Republic, 8–9, 13, 58–60, 77n14
      • assessment of, 162
      • economic performance of, 160
      • IMF and, 156
      • inflation expectations in, 121f, 178t
      • inflation in, 161f
      • inflation targeting in, 158–59
      • loss-function values for, 163f
      • monetary policy in, 155–63
      • nominal interest rates in, 160f
      • real interest rates in, 160f
      • unemployment rate in, 159n4, 161f

    D

    • D’avila, E., 98
    • Debelle, G., 33n1
    • De facto fixed exchange rate, 156–58
    • Deflation trap, 37, 220n10
    • Dell’Ariccia, G., 71, 73
    • Demand shocks, 202f
      • core-QPM and, 198–201
      • expansionary, 225f
      • inflation targeting and, 261–62
    • Dincer, N. N., 175
    • Dincer-Eichengreen index, 120, 121f
    • Disinflation
      • core-QPM and, 198
      • in India, 189
    • DM1 loss function, 221
    • Dooley, M. R., 108
    • Dornbusch, R., 108
    • Dots, 233n16
    • DSGE. See Dynamic stochastic general equilibrium methodology
    • Dual mandate CB loss function, IFB reaction function and, 222f
    • Duarte, F., 87, 88, 100
    • Durre, A., 65n16
    • Dynamic stochastic general equilibrium (DSGE) methodology, 50–51
      • CNB, 167, 167n11

    E

    • East African Community, 245
    • Economic expansion, interest rates during, 69–70
    • Economic structure, of low-income countries, 245t
    • Effective lower bound
      • in Canada, 125n5
      • historic, 148n14
      • in New-Keynesian models, 148
    • Eggertsson, G. B., on expectations, 130n8
    • Eichengreen, B., 175
    • Eisenbach, T. M., 71 n4
    • Emerging market economies
      • expectations in, 39–42
      • foreign exchange market index in, 249f
      • inflation targeting in, 39–42
    • Employment, 3n1
    • Endogenous policy rate, 129
      • credibility, 199f, 220n10
    • Energy prices, positive shocks to, 26
    • Engen, E. T., 132, 215
    • Equilibrium, long-term, 33–34
    • Equilibrium real interest rate, for United States, 123
    • Etula, T., 97
    • Euro area, inflation expectations in, 121f
    • European Central Bank, 60
    • Evans, C. J., 230
    • Exchange rate instruments, CNB and, 176–79
    • Exchange rates, 136f, 139f, 141f, 143f
      • in Canada, 122f
      • equations, 195
      • fixed, 57, 156–58, 256
      • in Israel, 40f, 41f
      • in low-income countries, 5
      • managed exchange rate framework, 55
      • oil prices and, 122f
      • pegs, 4n4, 155
      • real, 145–46, 148–49, 202f, 203f, 204f
      • reserve money operating targets and, 55
      • shock absorption and, 144–45
      • Svensson on, 176
    • Exit policy, 35–38
    • Exogenous interest rate paths, 27
    • Expansionary demand shock, with nonlinear Phillips curve, 225f
    • Expectations
      • backward-looking, 143f
      • in Canada, 126–28
      • consensus inflation, 120f
      • core model and, 50
      • defining, 32
      • Eggertsson on, 130n8
      • in emerging market economies, 39–42
      • inflation-forecast targeting and, 256
      • management of, in Israel, 40–41
      • management of, in United Kingdom, 38–39
      • multicountry sample of, 41
      • policy, 255–57
      • shock absorption and, 37
      • shock amplification and, 37
      • Svensson on, 126n6
      • threats and, 126–28
      • Woodford on, 130n8, 255
      • See also Inflation expectations
    • Expert Committee to Revise and Strengthen the Monetary Policy Framework, 188, 190
    • Export rates, 177f
    • Extended forward guidance, Federal Reserve using, 211

    F

    • Facebook, 109
    • Farhi, E., 98
    • FCIs. See Financial conditions indexes
    • Federal funds futures, 218f
    • Federal funds rate, 222f, 225f
      • confidence bands for, 227f
      • IFB reaction function and, 221
      • nominal, 217f
      • reaction function, 223f
      • real, 217f
    • Federal Open Market Committee (FOMC), 12, 63n14, 111, 132, 209, 221, 261
      • goals and policy strategy of, 210
      • inflation rate and, 210
      • on publication, 233
      • quantitative easing and, 216f
    • Federal Reserve, US, 4, 77, 111
      • ad hoc forward guidance of, 34
      • balance sheet, 66n17
      • credit allocation and, 63n14
      • dual mandate, 209–12
      • extended forward guidance and, 211
      • forward guidance of, 36–37, 214
      • FPAS, 261
      • Interest on excess reserves at, 57n5, 58
      • loss-minimizing strategies of, 217–30
      • Overnight reverse repo facility, 58
      • quantitative easing by, 211
      • recent developments at, 212–17
      • remuneration by, 60n11
      • Summary of Economic Projections, 213, 232
      • toolkit of, 213–14
      • transparency at, 212–13
      • on unconventional forward guidance, 132
      • See also Federal Open Market Committee
    • Feedback response, inflation-forecast targeting, 26f
    • Ferrero, G., 110
    • Filardo, A., 75, 132
    • Finance Act of 2016, 189
    • Financial conditions
      • coefficients on, 95
      • country coverage, 86t
      • GaR and, 85–92
      • monetary policy and, 260
      • role of, 83
      • welfare gains and, 94–96
    • Financial conditions indexes (FCIs), 83, 85–86, 86n3
    • Financial crises
      • Asian, 157
      • interest rates and, 72–74
      • transparency and, 213t
      • of 2009, 36
    • Financial sector indicators, for low-income countries, 244t
    • Financial Services Regulatory Relief Act 2006, 60n11
    • Financial stability mandate
      • complications associated with, 115
      • costs and benefits of, 74–76
    • Firms, 88
      • monopoly power of, 90n5
    • Fiscal backdrop, optimal control with, 141f
    • Fiscal policy
      • in Canada, 122, 140
      • in low-income countries, 247
      • monetary policy and, 247
    • Fiscal Responsibility and Budget Management Act, 187
    • Fixed exchange rates, 57, 256
      • de facto, 156–58
    • Flexible inflation targeting, 70
    • Floor system, with excess reserves
    • remunerated at policy rate, 60–61
    • FOMC. See Federal Open Market Committee
    • Food prices, in CPI, 191–92
    • Forecast errors, 197
    • Forecasting and policy analysis system (FPAS), 19
      • accounting in, 47
      • accuracy of, 164f
      • CNB, 163–73
      • components of, 46–47
      • core quarterly forecasting model in, 46
      • external assumptions sources, 47
      • Federal Reserve, 261
      • full-time forecast team in, 46
      • information technology in, 47
      • in low-income countries, 251–52
      • medium-term horizon, 165–66
      • near-term subsystem, 47, 164–65, 167–68
      • numerical calibration of, 50
      • ownership of, 171–73
      • reporting in, 47
      • satellite models, 46
      • schedules, 46–47
      • transparency and, 174
    • Forecast output
      • purposes of, 45–46
      • risk assessment and, 45
      • uncertainty and, 45
    • Foreign exchange market index
      • in emerging market economies, 249f
      • in low-income countries, 249f
    • Foreign exchange stability, 77n14
    • Forward guidance
      • ad hoc, 34
      • conventional, 9, 34, 128–30, 263
      • extended, 211
      • of Federal Reserve, 36–37, 214
      • types of, 128–30
      • unconventional, 130–34
    • FPAS. See Forecasting and policy analysis system
    • Freedman, C, 20n3, 34n2
    • Full disclosure, at CNB, 174–79

    G

    • Gagnon, J. E., 214
    • Gale, D., 70n3
    • Galí, J, 84, 261
    • Gambacorta, L., 85, 99
    • GaR. See GDP at Risk
    • Gaspar, V. M., 35n3
    • GDP. See Gross domestic product
    • GDP at Risk (GaR), 76, 83–84
      • calibration, 92
      • central banks and, 89
      • estimation of, 86–88
      • financial conditions and, 85–92
      • uncertainty and, 91
    • Gertler, M., 71 n4, 85, 98, 99
    • Ghana, 242
      • inflation targeting in, 250
    • Giannone, D., 70, 83, 98
    • Gilchrist, S., 71 n4, 98, 99
    • Gillan, J. M., 65n16
    • Global equilibrium interest rate, inflation expectations and, 262
    • Global Financial Stability Report (IMF), 76–77, 83–84
    • Global Integrated Monetary and Fiscal model, 75
    • Global nonlinearities, 75
    • Goal independence, of central banks, 19n2
    • Goodhart, C., 232
    • Gordon, D., 17
    • Gorodnichenko, Y., 23
    • Gourio, F., 75, 97
    • GPM-g3 model, 177f
    • Great Recession, 171n18, 221
    • Greenwood, R., 66
    • Gross domestic product (GDP), 8, 48, 73, 83–84
      • in Czech Republic, 161f
      • growth, 177f, 217f

    H

    • Hamilton-Jacobi-Bellman (HJB) equation, 101
    • Hanson, S. G., 66
    • He, Z., 99
    • Headline inflation, 22, 136f, 139f, 141f, 143f
    • HJB. See Hamilton-Jacobi-Bellman equation
    • Hodrick-Prescott filter, 85
    • Hofmann, B., 132
    • Holston, K., 123
    • Human resource input, CNB, 169–71

    I

    • IFB reaction function. See Inflation-forecast-based reaction function
    • IMF. See International Monetary Fund
    • India, 8–9, 11–12
      • credibility in, 193
      • inflation-forecast targeting in, 189–91
      • inflation phases in, 185–91
      • inflation targeting in, 35, 260
      • interest rates in, 190f
      • macroeconomic models in, 185–91
      • QPM for, 193–94
      • transmission channels in, 189–91
    • Indonesia, 60
    • Inflation
      • Bank of Canada and, 260
      • for Canada, 120f
      • contractionary shocks and, 127
      • core, 22, 135, 136f, 139f, 141f, 143f
      • CPI, 124, 189
      • in Czech Republic, 161f
      • equations, 194–95
      • headline, 22, 136f, 139f, 141f, 143f
      • in Israel, 40f, 41f
      • output gap and, 246f
      • PCE, 223f , 225f
      • phases of, in India, 185–91
      • in United States, 261
    • Inflation control, 119–20
    • Inflation expectations, 202f, 203f, 204f
      • in Canada, 120f, 121f
      • consensus, 120f
      • in Czech Republic, 121f
      • in euro area, 121f
      • global equilibrium interest rate and, 262
      • inflation-forecast targeting and, 121f
      • in Japan, 121f
      • in New Zealand, 121f
      • in Sweden, 121f
      • in United States, 121f
    • Inflation-forecast-based (IFB) reaction
    • function, 136f, 143f
      • dual mandate CB loss function and, 222f
      • federal funds rate and, 221
      • loss-minimizing strategies and, 220
      • strategy, 137
    • Inflation forecasting
      • credibility of, 263–64
      • principles of, 23–25
      • publication of, 232–33
      • Svensson on, 20
    • Inflation-forecast targeting, 3–4
      • avant-garde of, 25
      • of Bank of Canada, 24, 134t
      • of Central Bank of Chile, 24
      • central banks and, 108, 257n1
      • communication and, 112, 258
      • conventional forward guidance and, 128
      • of Czech National Bank, 24, 260
      • deviation of consensus headline, 42f
      • expectations and, 256
      • feedback response, 26f
      • in India, 189–91
      • inflation expectations and, 121f
      • institutional modalities for, 112
      • monetary instruments in, 259
      • in New Zealand, 19
      • operating targets in, 259
      • operational frameworks of, 259–60
      • perspectives for, 13
      • in practice, 259–63
      • principles and practices of, 4–8
      • of RBNZ, 24
      • requirements for, 24–25
      • schedules, 25
      • transmission, 26f
      • transparency and, 25
    • Inflation paths, for policy frameworks, 127f
    • Inflation rate
      • defining, 85–86
      • FOMC and, 210
    • Inflation Report, Czech National Bank, 113, 172
    • Inflation targeting, 3, 9
      • benefits and costs of, 22n7
      • in Canada, 9n9
      • central bank in, 19–20
      • by CNB, 158
      • communications in support of, 107–11
      • credibility and, 255
      • in Czech Republic, 158–59
      • defining, 3n2
      • demand shocks and, 261–62
      • in emerging market economies, 39–42
      • expectations under, 38–42
      • flexible, 26n8, 108
      • in Ghana, 250
      • history of, 20–21
      • in India, 35, 260
      • in Israel, 40–41
      • lite, 251
      • in low-income countries, 248
      • multicountry sample of, 41
      • without policy analysis, 158–59
      • Svensson on, 26n8
      • in United Kingdom, 38–39
    • Instrument independence, of central banks, 19
    • Interbank monitoring, 65n16
    • Interbank rates, 57n5
    • Interest rate paths
      • exogenous, 27
      • publication of, 231–32
    • Interest rates
      • around baseline event set, 215t
      • in Canada, 122n3
      • central banks and, 27
      • crisis risk and, 72–74
      • during economic expansion, 69–70
      • equilibrium real, 123
      • forecasts, transparency and, 34–35
      • global equilibrium, 262
      • in India, 190f
      • in Israel, 40f, 41f
      • leverage and, 73
      • monetary operations and, 54
      • negative, 141f
      • neutral real, 122n3
      • nominal, 160f
      • real, 148–49, 160f, 177f
      • short-term, 20n5, 54–55, 57, 125
      • term structure of, 150
    • Intermediary sector, 88–89
    • International Monetary Fund (IMF), 47, 70n1, 71
      • Czech Republic and, 156
      • Executive Board, 252
      • International Financial Statistics database, 85–86
      • low-income countries and, 241–42, 252
      • role of, 252
      • Spillover Report, 76
    • Intuition, 94
    • Investment Savings (IS) equation, in New-Keynesian models, 146
    • Israel
      • Bank of Israel, 40
      • exchange rates in, 40f, 41f
      • expectations management in, 41–42
      • inflation in, 40f, 41f
      • inflation targeting in, 40–41
      • interest rates in, 40f, 41f

    J

    • Japan, 36
      • inflation expectations in, 121f
    • Jordà, Ò., 70n3

    K

    • Kamenik, O., 23
    • Karadi, P., 85, 99
    • Kashyap, A., 75, 97
    • Kenya, 242
    • Kiem, H., 23
    • Kiyotaki, N., 98
    • Klee, E., 65n16
    • Kloster, A., 65n16
    • Korinek, A., 98
    • Krishnamurthy, A., 98, 99
    • Kuttner, K., 39
    • Kydland, F., 17

    L

    • Laeven, L., 73
    • Lane, T., 140
    • Laubach, T., 123, 132, 215
    • Laxton, D., 20n3, 33n1, 34n2, 39
    • Lehman Brothers, 262
    • Liang, N., 74
    • Linearization, 90n7
    • Long market
      • nominal rates, 224f
      • real rates, reaction function, 224f
    • Long-Term Capital Management, 261
    • Long-term equilibrium, 33–34
    • Long-term targets, 21–23
    • López-Salido, D., 98
    • Loss function, 223f
      • dual mandate CB, 222f
      • minimizing, 220–21
      • value of, 222f, 225f
    • Loss-minimizing strategies (OPT), 137–38
      • confidence bands and, 226–30
      • Federal Reserve, 217–30
      • IFB reaction function and, 220
      • illustrative simulation results, 221–22
      • New-Keynesian models and, 147–48
      • sensitivity analysis, 222–23
      • Taylor rule and, 219
      • variants of, 222–23
    • Low-income countries
      • central banks in, 241
      • economic structure of, 245t
      • exchange rates in, 5
      • financial sector indicators for, 244t
      • fiscal policy in, 247
      • foreign exchange market index in, 249f
      • FPAS in, 251–52
      • IMF and, 241–42, 252
      • inflation targeting in, 248
      • macroeconomic volatility and, 245–46
      • monetary policy in, 243–47
      • operational frameworks in, 248–50
      • price stability in, 248
      • supply shocks in, 245–46
      • transmission mechanisms in, 243–47
    • Lucas, R., 261

    M

    • Macroeconomic Forecasting Division, CNB, 168
    • Macroeconomic models, 6, 45
      • in India, 185–91
    • Macroeconomic volatility, low-income countries and, 245–46
    • Macroprudential policy, 71, 77
    • Mahatma Gandhi National Rural
    • Employment Guarantee Act, 187
    • Managed exchange rate framework, 55
    • Managed float, of CNB, 157
    • Market rates, mid-corridor systems targeting, 58–59
    • Marquez, R., 73
    • Martin, R., 70n3
    • MAS. See Monetary Authority of Singapore
    • Mauro, P. , 71
    • McCulley, P. , 99
    • Mendes, R. R., 122n3
    • Mendoza, E. G., 70n3
    • Mester, L., 231
    • Mexico, 58–60
    • Mid-corridor system, 58f
      • with policy rate attached to central bank instrument, 60, 61f
      • targeting market rates, 58–59
    • Mishkin, F. S., 174
    • Model simulations, Canada and, 134–42
    • Moench, E., 97
    • Monetary aggregates, in United States, 56
    • Monetary Authority of Singapore (MAS), 55
    • Monetary instruments, 53n1, 56–58
      • in inflation-forecast targeting, 259
      • traditional, 259
    • Monetary operations
      • assessing frameworks, 62–64, 67t
      • basic designs, 58–62
      • building blocks of, 53–64
      • clarity of, 62–63
      • costs and capacity requirements, 64
      • framework, 54f
      • framework comparisons, 65f
      • interest rates and, 54
      • operating target in, 53–56
      • operational framework of, 53
      • of Swiss National Bank, 54n2
      • transmission in, 63–64
    • Monetary policy
      • in Canada, 134–35
      • communication and, 110
      • consultation clauses, 252
      • Core-QPM and, 197–201
      • in Czech Republic, 155–63
      • derivation of solution, 103
      • financial conditions and, 260
      • fiscal policy and, 247
      • loss function equations, 194
      • in low-income countries, 243–47
      • modernizing, 250–52
      • objectives of, 69
      • optimal, 100–102
      • risk-avoidance and, 260
      • in Sub-Saharan Africa, 242
      • Svensson on, 264
      • technical literature on, 217f
      • uncertainty and, 217f
      • in United States, 213t
    • Monetary Policy Committee, India, 189
    • Monetary Policy Committee, UK, 38
    • Monetary Policy Reports, 7–8, 8n7, 108, 258
      • for Chile, 109–10
      • publication of, 230n14
    • Monetary policy rule, 49
      • coefficients, 95t
    • Monetary targeting, 55
    • Money, defining, 256
    • Money growth rules, 157n3
      • financial innovation and, 256
    • Moore, J., 98
    • Muir, T., 97, 98
    • Multiple-indicator approach, 185n2
    • Mundell-Fleming, 140
    • Munyan, T., 70 n3

    N

    • Negative interest rates, optimal control with, 141f
    • Negative shocks, 212
    • New Keynesian models, 74, 84, 88
      • for Canada, 146–52
      • commodity terms of trade in, 151–52
      • effective lower bound in, 148
      • IS equation in, 146
      • loss-minimizing strategies and, 147–48
      • Phillips curve in, 146–47
      • policy rates and, 147–48
      • potential output in, 151
      • real exchange rate and, 148–49
      • real interest rates and, 148–49
      • relative prices in, 149–50
      • risk-adjusted uncovered interest parity condition and, 149–50
      • term structure in, 150
      • unemployment rate in, 150–51
    • New Zealand, 61–62, 113–14
      • inflation expectations in, 121f
      • inflation-forecast targeting in, 19
      • See also Reserve Bank of New Zealand
    • Nigeria, 242
    • Nominal anchor, 25–27
      • policy expectations and, 255–57
    • Nominal federal funds rate, 217f
    • Nominal interest rates, in Czech Republic, 160f
    • Non-inflation-targeting regimes, 257n2
    • Nonlinear Phillips curve, 226n12
    • expansionary demand shock with, 225f
    • Norges Bank, 110
      • policy rate of, 111f
    • Norway, 61–62, 111f

    O

    • Oil prices, 133
      • in Canada, 122
      • exchange rate and, 122f
    • OLS. See Ordinary least squares
    • Open market operations, 56–57, 57n4
      • design of, 59
    • Operating targets
      • in inflation-forecast targeting, 259
      • in monetary operations, 53–56
      • reserve money, 55
      • as short-term rates, 54–55
    • Operational control, 6–7
    • Operational frameworks
      • of inflation-forecast targeting, 259–60
      • in low-income countries, 248–50
    • Opportunity costs, 262n3
    • OPT. See Loss function
    • Optimal control
      • with fiscal backdrop, 141f
      • with negative interest rate, 141f
      • predicted outcomes under, 139f
    • Ordinary least squares (OLS), 86
    • Output, 3n1
      • forecast, 45–46
      • potential, 151
    • Output gap, 87f, 136f, 139f, 141f, 143f, 202f, 203f, 204f, 222f, 225f
      • confidence bands for, 229f
      • equations, 194
      • inflation and, 246f
      • mean and variance of, 94f
      • reaction function, 223f
      • vulnerability, 91
    • Outright purchases, 263
    • Overnight lending rates, 6–7

    P

    • Panel estimation, mean and volatility from, 88f, 89f
    • Park, Y. C., 108
    • PCE inflation. See Personal consumption expenditure inflation
    • Peek, J., 100
    • Perfect policy credibility, 200f
    • Personal consumption expenditure (PCE) inflation, 225f
      • confidence bands for, 228f
      • reaction function, 223f, 224f
    • Pescatori, A., 221
    • Phillips curve, 90
      • adjustment, 32f
      • convex, 196f
      • core model and, 48–49
      • expectations-augmented, 32
      • features of, 195
      • in New-Keynesian models, 146–47
      • nonlinear, 225f, 226n12
      • short-run, 33
      • unemployment rates and, 33f
    • Plosser, C, 230
    • Policy analysis, inflation targeting without, 158–59
    • Policy credibility, 144–45
      • perfect, 200f
    • Policy expectations, nominal anchor and, 255–57
    • Policy frameworks, inflation paths for, 127f
    • Policy instruments, 31–34, 49, 53n1
    • Policy rate path, 27
      • communication on, 129
    • Policy rates, 136f, 139f, 141f, 143f, 202f, 203f
      • attached to central bank instrument, 60, 61f
      • of Bank of Canada, 130
      • central banks on, 57
      • endogenous, 129
      • floor system with excess reserves remunerated at, 60–61
      • New-Keynesian models and, 147–48
    • Policy responses, 201
      • delayed, 204f
    • Portillo, R., 251
    • Positive shocks, to energy prices, 26
    • Potential output, in New-Keynesian models, 151
    • Prescott, E., 17
    • Price stability, 22
      • in low-income countries, 248
    • Privatization, 10
    • Projection models
      • core, 24
      • quarterly, 9, 193–94

    Q

    • QPM-gap model, 159
      • CNB, 165, 166y
      • comparisons of, 167t
    • Quantitative easing, 36, 263
      • by Federal Reserve, 211
      • FOMC and, 216f
      • 10-year term-premium effect of, 216f
    • Quarterly projection model (QPM), Bank of Canada, 9
      • for India, 193–94
      • variants, 193
    • Quasi-equilibrium, 35, 211n2
    • Qvigstad, J. F., 26n8

    R

    • RBI. See Reserve Bank of India
    • Reaction function, 49
      • comparisons of, 223f, 224f
      • for expansionary demand shock with
      • nonlinear Phillips curve, 225f
      • federal funds rate, 223f
      • long market nominal rates, 224f
      • long market real rates, 224f
      • output gap, 223f
      • PCE inflation, 223/, 224/
      • See also Inflation-forecast-based reaction function
    • Real exchange rate, 202f, 203f, 204f
      • New-Keynesian models and, 148–49
      • shock absorption and, 145
      • shock amplification and, 146
    • Real federal funds rate, 217f
    • Real interest rates, 177f
      • in Czech Republic, 160f
      • equations, 194
    • New-Keynesian models and, 148–49
    • Reflationary policy, 37
    • Reifschneider, D., 215
    • Reinhart, C. M., 70n3
    • Relative prices, in New-Keynesian models, 149–50
    • Rennison, L., 132
    • Representative household, 88
    • Reserve averaging, 59n7
    • Reserve Bank of India (RBI), 11, 185, 260
      • Expert Committee to Revise and Strengthen the Monetary Policy Framework, 188, 190
    • Reserve Bank of New Zealand, 3, 5, 6, 18, 110
      • inflation-forecast targeting of, 24
    • Reserve money operating targets, exchange rates and, 55
    • Reserve requirements, in United States, 56n3
    • Risk-adjusted uncovered interest parity condition, 144–45
      • New-Keynesian models and, 149–50
    • Risk assessment, forecast output and, 45
    • Risk avoidance, 9–10, 42–43
      • monetary policy and, 260
      • in United States, 211
    • Rogoff, K. S., 70n3
    • Rosengren, E. S., 100
    • Rungcharoenkitkul, P. , 75

    S

    • Sannikov, Y., 71 n4, 99
    • Saxena, S. C, 70 n3
    • Schularick, M., 70n3, 73
    • Secchi, A., 110
    • Secured rates, 58
    • Sensitivity analysis, 147n13
    • Shin, H. S., 97
    • Shock absorption
      • asset prices and, 144–46
      • credibility and, 37
      • exchange rate and, 144–45
      • expectations and, 37
      • real exchange rate and, 145
    • Shock amplification
      • asset prices and, 146
      • expectations and, 37
      • real exchange rate and, 146
    • Shocks
      • contractionary, 127
      • demand, 198–201, 202f, 225f, 261–62
      • negative, 212
      • positive, 26
      • supply, 201, 203f, 245–46
      • terms-of-trade, 246 n6
    • Short-term interest rate, 20n5
      • central banks and, 57, 125
      • operating targets as, 54–55
    • Short-term money markets, 64n15
    • Signoretti, F. M., 85, 99
    • Sim, J., 75, 97
    • Simsek, A., 98
    • Smets, F., 70n2, 84
    • Sri Lanka, 250
    • Stebunovs, V., 65n16
    • Stein, J. C., 66, 72, 98
    • Stimulus, 36, 132
      • in Canada, 140
    • Stock, J., 261
    • Sub-Saharan Africa
      • central banks in, 250
      • monetary policy in, 242
    • Summary of Economic Projections, Federal Reserve, 213, 232
    • Summers, L., 21, 70n3
    • Supply shocks, 203f
      • core-QPM and, 201
      • in low-income countries, 245–46
    • Svensson, Lars, 3–4, 5, 8n8, 70n2, 75, 84
      • on exchange rates, 176
      • on expectations, 126n6
      • on inflation forecasting, 20
      • on inflation targeting, 26n8
      • on monetary policy, 264
    • Sverige Riksbank, 110, 120, 232
    • Sweden, 58–60
      • inflation expectations in, 121f
    • Swiss franc London interbank offered Rate, 54n2
    • Swiss National Bank, 54n2
      • monetary operations of, 54n2

    T

    • Tanzania, 242
    • Taper tantrum, 111, 211
      • communications in, 216
    • Taylor, A. M., 70n3, 73
    • Taylor, J., 99
    • Taylor rule, 42n5, 84, 95
      • loss-minimizing strategies and, 219
      • welfare gains under, 97t
    • Terms-of-trade shocks, 246n6
    • Term structure
      • of interest rates, 150
      • in New-Keynesian models, 150
    • Tiered-floor system, 61–62, 63f
    • Tolerance band, CNB on, 157
    • Toloui, R., 99
    • Tootell, G., 100
    • Transmission channels, 49–50
      • in India, 189–91
      • monetary operations and, 63–64
    • Transmission mechanisms, 12
      • in low-income countries, 243–47
    • Transparency, 7–8, 18
      • accountability and, 114, 257–59
      • advances in, 230–33
      • of CNB, 231n15
      • at Federal Reserve, 212–13
      • FPAS and, 174
      • inflation-forecast targeting and, 25
      • interest rate forecasts and, 34–35
      • postcrisis, 213t
    • Treasury rates, 218f
    • Treasury yield, 217f, 218f
    • Tůma, Z., 175
    • Turunen, J., 221
    • Twitter, 109

    U

    • Uganda, 242
    • Uncertainty, 25, 158
      • CNB and, 169
      • communication of, 114–15
      • forecast output and, 45
      • GaR and, 91
      • measures of, 45
      • monetary policy and, 217f
    • Unconventional forward guidance
      • in Canada, 130–31, 133–34
      • communication and, 130
      • country experiences with, 131–34
      • Federal Reserve on, 132
      • in United Kingdom, 131–32
      • in United States, 132
    • Uncovered interest parity, 49
      • equations, 194–95
    • Unemployment rate, 217f
      • in Czech Republic, 159n4, 161f
      • in New-Keynesian models, 150–51
    • Unemployment rates, 33–34, 136f, 139f, 141/, 143/
      • Phillips curve and, 33f
      • in United States, 133f
    • United Kingdom, 60–61
      • expectation management in, 38–39
      • inflation targeting in, 38–39
      • unconventional forward guidance in, 131–32
      • See also Bank of England
    • United States, 4, 8–9, 46
      • equilibrium real interest rate for, 123
      • inflation expectations in, 121f
      • inflation in, 261
      • monetary aggregates in, 56
      • monetary policy in, 213t
      • reserve requirements in, 56n3
      • risk avoidance in, 211
      • unconventional forward guidance in, 132
      • unemployment rates in, 133f
      • See also Federal Reserve

    V

    • Value at risk, 83
    • VAR. See Vector autoregression
    • Vector autoregression (VAR), 75, 243
    • Velvet Revolution, 156
    • Viñals, J., 72

    W

    • Watson, M., 261
    • Websites, 8
    • Weiland, J., 23
    • Welfare gains
      • financial conditions and, 94–96
      • under Taylor rule, 97t
    • Werning, I., 91, 98
    • Wholesale price index, 187
    • Wieland, J., 23
    • Williams, J., 123
    • Wilson, B. A., 70n3
    • Woodford, M., 6n6, 84, 85, 99, 220n9
      • on expectations, 130n8, 255
    • World War II, 17, 70

    Y

    • Yellen, J., 77–78, 132

    Z

    • Zakrajsek, E., 97
    • Zambia, 242
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