Inflation Targeting And Capital Openness In The Small Open Economy
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Inflation Targeting And Capital Openness In The Small Open Economy
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Author : Sanchita Mukherjee
language : en
Publisher:
Release Date : 2011
Inflation Targeting And Capital Openness In The Small Open Economy written by Sanchita Mukherjee and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.
The Effects Of Capital Market Openness On Exchange Rate Pass Through And Welfare In An Inflation Targeting Small Open Economy
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Author : Sanchita Mukherjee
language : en
Publisher:
Release Date : 2010
The Effects Of Capital Market Openness On Exchange Rate Pass Through And Welfare In An Inflation Targeting Small Open Economy written by Sanchita Mukherjee and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with categories.
Monetary Policy And Exchange Rate Volatility In A Small Open Economy
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Author : Jordi Galí
language : en
Publisher:
Release Date : 2002
Monetary Policy And Exchange Rate Volatility In A Small Open Economy written by Jordi Galí and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002 with Anti-inflationary policies categories.
We lay out a small open economy version of the Calvo sticky price model, and show how the equilibrium dynamics can be reduced to a tractable canonical system in domestic inflation and the output gap. We employ this framework to analyze the macroeconomic implications of three alternative monetary policy regimes for the small open economy: domestic inflation targeting, CPI targeting and an exchange rate peg. We show that a key difference among these regimes lies in the relative amount of exchange rate volatility that they entail. We also discuss a special case for which domestic inflation targeting constitutes the optimal policy, and where a simple second order approximation to the utility of the representative consumer can be derived and used to evaluate the welfare losses associated with suboptimal regimes.
Inflation Targeting In A Small Open Economy
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Author : Alan Sutherland
language : en
Publisher:
Release Date : 2001
Inflation Targeting In A Small Open Economy written by Alan Sutherland and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001 with Anti-inflationary policies categories.
Monetary And Fiscal Rules In An Emerging Small Open Economy
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Author : Nicoletta Batini
language : en
Publisher:
Release Date : 2009
Monetary And Fiscal Rules In An Emerging Small Open Economy written by Nicoletta Batini and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with Fiscal policy categories.
We develop a optimal rules-based interpretation of the 'three pillars macroeconomic policy framework': a combination of a freely floating exchange rate, an explicit target for inflation, and a mechanism than ensures a stable government debt-GDP ratio around a specified long run. We show how such monetary-fiscal rules need to be adjusted to accommodate specific features of emerging market economies. The model takes the form of two-blocs, a DSGE emerging small open economy interacting with the rest of the world and features, in particular, financial frictions It is calibrated using Chile and US data. Alongside the optimal Ramsey policy benchmark, we model the three pillars as simple monetary and fiscal rules including and both domestic and CPI inflation targeting interest rate rules alongside a 'Structural Surplus Fiscal Rule' as followed recently in Chile. A comparison with a fixed exchange rate regime is made. We find that domestic inflation targeting is superior to partially or implicitly (through a CPI inflation target) or fully attempting to stabilizing the exchange rate. Financial frictions require fiscal policy to play a bigger role and lead to an increase in the costs associated with simple rules as opposed to the fully optimal policy.
Inflation Targeting And Exchange Rate Management In Less Developed Countries
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Author : Mr.Marco Airaudo
language : en
Publisher: International Monetary Fund
Release Date : 2016-03-08
Inflation Targeting And Exchange Rate Management In Less Developed Countries written by Mr.Marco Airaudo and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-03-08 with Business & Economics categories.
We analyze coordination of monetary and exchange rate policy in a two-sector model of a small open economy featuring imperfect substitution between domestic and foreign financial assets. Our central finding is that management of the exchange rate greatly enhances the efficacy of inflation targeting. In a flexible exchange rate system, inflation targeting incurs a high risk of indeterminacy where macroeconomic fluctuations can be driven by self-fulfilling expectations. Moreover, small inflation shocks may escalate into much larger increases in inflation ex post. Both problems disappear when the central bank leans heavily against the wind in a managed float.
Interest Rate Rules Endogenous Cycles And Chaotic Dynamics In Open Economies
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Author : Mr.Marco Airaudo
language : en
Publisher: International Monetary Fund
Release Date : 2012-05-01
Interest Rate Rules Endogenous Cycles And Chaotic Dynamics In Open Economies written by Mr.Marco Airaudo and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-05-01 with Business & Economics categories.
We present an extensive analysis of the consequences for global equilibrium determinacy in flexible-price open economies of implementing active interest rate rules, i.e., monetary rules where the nominal interest rate responds more than proportionally to inflation. We show that conditions under which these rules generate aggregate instability by inducing liquidity traps, endogenous cycles, and chaotic dynamics depend on specific characteristics of open economies. In particular, rules that respond to expected future inflation are more prone to induce endogenous cyclical and chaotic dynamics the more open the economy to trade.
Interest Rate Targeting In A Small Open Economy
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Author : Mr.Guillermo Calvo
language : en
Publisher: International Monetary Fund
Release Date : 1990-03-01
Interest Rate Targeting In A Small Open Economy written by Mr.Guillermo Calvo and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1990-03-01 with Business & Economics categories.
An important hurdle in analyzing interest rate targeting is that standard models usually lead to price level or inflation rate indeterminacy. This paper develops a simple framework in which such problems do not arise because the bonds whose interest rate is controlled provide liquidity services. This framework is used to examine interest rate targeting in a small open economy under predetermined exchange rates. A permanent increase in the interest rate has no real effects. In contrast, a temporary increase in the interest rate leads to higher consumption and to a current account deficit that worsens over time.
Optimal Monetary Policy In A Small Open Economy Under Segmented Asset Markets And Sticky Prices
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Author : Ruy Lama
language : en
Publisher: International Monetary Fund
Release Date : 2007-09
Optimal Monetary Policy In A Small Open Economy Under Segmented Asset Markets And Sticky Prices written by Ruy Lama and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007-09 with Business & Economics categories.
This paper studies optimal monetary policy in a two-sector small open economy model under segmented asset markets and sticky prices. We solve the Ramsey problem under full commitment, and characterize the optimal monetary policy in a calibrated version of the model. The findings of the paper are threefold. First, the Ramsey solution mimics the allocations under flexible prices. Second, under the optimal policy the volatility of non-tradable inflation is close to zero. Third, stabilizing nontradable inflation is optimal regardless of the financial structure of the small open economy. Even for a moderate degree of price stickiness, implementing a monetary policy that mitigates asset market segmentation is highly distortionary. This last result suggests that policymakers should resort to other policy instruments in order to correct financial imperfections.
Inflation Targeting And Exchange Rate Rules In An Open Economy
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Author : Mr.Eric Parrado
language : en
Publisher: INTERNATIONAL MONETARY FUND
Release Date : 2004-02-01
Inflation Targeting And Exchange Rate Rules In An Open Economy written by Mr.Eric Parrado and has been published by INTERNATIONAL MONETARY FUND this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004-02-01 with Business & Economics categories.
This paper provides a simple dynamic neo-Keynesian model that can be used to analyze the impact of monetary policy that considers inflation targeting in a small open economy. This economy is characterized by imperfect competition and short-run price rigidity. The main findings of the paper are that, depending on what shocks affect the economy, the effects of inflation targeting on output and inflation volatility depend crucially on the exchange rate regime and the inflation index being targeted. First, in the presence of real shocks, flexible exchange rates dominate managed exchange rates, while for nominal shocks the reverse is true. Second, domestically generated inflation targeting is preferable to CPI inflation targeting, because the former is more stabilizing not only in relation to both measures of inflation, but also to the output gap and the real exchange rate. Finally, flexible inflation targeting outperforms strict inflation targeting in terms of welfare.