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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