No. 5/2002
ECONOMETRIC INFLATION TARGETING
Gunnar Bårdsen
Eilev S. Jansen
Ragnar Nymoen
Abstract:
Inflation targeting requires inflation forecasts, yet most models in the
literature are either theoretical or calibrated. The motivation for this
paper is therefore threefold: We seek to test and implement an econometric
model for forecasting inflation in Norwayone economy recently opting
for formal inflation targeting rather than a managed nominal exchange
rate. We also seek to quantify the relative importance of the different
transmission mechanisms with basis in empirical estimates rather
than calibrated values. Finally, we want to focus on and exploit econometric
issues required in the design and estimation of econometric models used
for inflation forecasting and policy analysis.
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