Hybrid Inflation and Price Level Targeting in Small-Open-Economy

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper we use a small open economy version of the Calvo sticky price model to investigate hybrid ination/price-level targeting. We explore the proprieties of this kind of targeting regime within a calibrated structural general equilibrium model. We also consider monetary policy in terms of Taylor interest rate rules and conduct a welfare analysis on various speci- cations. Our analyses show that hybrid targeting performs well and produces quantitatively good results, compared to those regimes that target only price levels or ination rates. A hybrid regime thus appears to provide a successful method for conducting monetary policy in a small open economy.

Keywords: Small Open Economy; Monetary Policy; Hybrid Targeting (search for similar items in EconPapers)
JEL-codes: C32 E58 E31 E52 (search for similar items in EconPapers)
Date: Written 2006-12
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http://mpra.ub.uni-muenchen.de/6173/

Related works:
Working Paper: Hybrid Inflation and Price Level Targeting in Small-Open-Economy (2006)
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