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

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines whether a small open economy DSGE-based New Keynesian model can provide a natural framework for policy conduct with the use of a hybrid monetary policy regime. Allowing for some inflation inertia, we develop a small open economy version of the Calvo sticky price model to investigate hybrid inflation/price-level targeting. We explore the proprieties of monetary policy in terms of Taylor interest rate rules and conduct a welfare analysis on various specifications. Our analysis show that hybrid targeting outperforms others specifications and produces quantitatively good results by lowering output and inflation variabilities, compared to those regimes that target only price levels or inflation rates.

Keywords: Small Open Economy; Monetary Policy; Hybrid Targeting (search for similar items in EconPapers)
JEL-codes: E31 E58 E52 (search for similar items in EconPapers)
Date: 2006-12
View list of references

Downloads: (external link)
http://mpra.ub.uni-muenchen.de/8734/

Related works:
Working Paper: Hybrid Inflation and Price Level Targeting in Small-Open-Economy (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany
Address: Schackstr. 4, D-80539 Munich, Germany
Contact information at EDIRC.
Series data maintained by Ekkehart Schlicht ().