Should a central bank react to food inflation? Evidence from an estimated model for Chile - HAL Accéder directement au contenu
Article dans une revue Economic Modelling Année : 2020

Should a central bank react to food inflation? Evidence from an estimated model for Chile

Résumé

We examine whether food price shocks are a major source of macroeconomic fluctuations. We estimate a small open economy DSGE model using an alternative Taylor rule applied to Chilean data. The empirical evidence suggests that food inflation played a non-trivial role in shaping Chile's de facto monetary policy actions. Consistent with its commitment to price stability, the central bank increases the policy rate in reaction to food inflation. Despite an immediate monetary policy reaction to a food price shock, the policy rate gradually tapers off. This is due to a second-round effect on non-food inflation propagated by the food price shock. A main finding is that monetary policy that targets headline inflation is welfare improving.
Loading...

Dates et versions

hal-03579680, version 1 (18-02-2022)

Identifiants

Citer

William Ginn, Marc Pourroy. Should a central bank react to food inflation? Evidence from an estimated model for Chile. Economic Modelling, 2020, 90, pp.221-234. ⟨10.1016/j.econmod.2020.05.011⟩. ⟨hal-03579680⟩
36 Consultations
0 Téléchargements
Dernière date de mise à jour le 07/04/2024
comment ces indicateurs sont-ils produits

Altmetric

Partager

Gmail Facebook Twitter LinkedIn Plus