01760cas a2200253 a 4500 AALejournalIMF011311 230101c9999 xx r poo 0 0eng d 5.00 USD 9781463904326 1018-5941 BD-DhAAL BD-DhAAL Aydin, Burcu. Incorporating Financial Stability in Inflation Targeting Frameworks / Burcu Aydin, Engin Volkan. Washington, D.C. : International Monetary Fund, 2011. 1 online resource (45 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The global financial crisis has exposed the limitations of a conventional inflation targeting (IT) framework in insulating an economy from shocks, and demonstrated that its rigid application may aggravate the effect of shocks on output and inflation. Accordingly, we investigate possible refinements to the IT framework by incorporating financial stability considerations. We propose a small open economy DSGE model, calibrated for Korea during the period of 2003 - 07, with real and financial frictions. The findings indicate that incorporating financial stability considerations can help smooth business cycle fluctuations more effectively than a conventional IT framework. Mode of access: Internet Volkan, Engin. IMF Working Papers; Working Paper ; No. 2011/224 Full text available on IMF http://elibrary.imf.org/view/journals/001/2011/224/001.2011.issue-224-en.xml IMF e-Library