TY - BOOK ID - 84783106 TI - What Measure of Inflation Should a Developing Country Central Bank Target? AU - Anand, Rahul. AU - Prasad, Eswar. AU - Zhang, Boyang. PY - 2015 SN - 1513547828 1513574027 1513597469 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Monetary policy KW - Inflation (Finance) KW - Consumer price indexes KW - Consumer price index KW - Cost of living indexes KW - CPIs (Consumer price indexes) KW - Retail price indexes KW - Cost and standard of living KW - Price indexes KW - Finance KW - Natural rate of unemployment KW - Monetary management KW - Economic policy KW - Currency boards KW - Money supply KW - Econometric models. KW - Developing countries KW - Emerging nations KW - Fourth World KW - Global South KW - LDC's KW - Least developed countries KW - Less developed countries KW - Newly industrialized countries KW - Newly industrializing countries KW - NICs (Newly industrialized countries) KW - Third World KW - Underdeveloped areas KW - Underdeveloped countries KW - Economic conditions KW - Inflation KW - Macroeconomics KW - Money and Monetary Policy KW - Price Level KW - Deflation KW - Monetary Policy KW - Policy Objectives KW - Policy Designs and Consistency KW - Policy Coordination KW - Macroeconomics: Consumption KW - Saving KW - Wealth KW - Monetary economics KW - Inflation targeting KW - Sticky prices KW - Consumption KW - Prices KW - National accounts KW - Economics KW - China, People's Republic of UR - https://www.unicat.be/uniCat?func=search&query=sysid:84783106 AB - In closed or open economy models with complete markets, targeting core inflation enables monetary policy to maximize welfare by replicating the flexible price equilibrium. We analyze this result in the context of developing economies, where a large proportion of households are credit constrained and the share of food expenditures in total consumption expenditures is high. We develop an open economy model with incomplete financial markets to show that headline inflation targeting improves welfare outcomes. We also compute the optimal price index, which includes a positive weight on food prices but, unlike headline inflation, assigns zero weight to import prices. ER -