The real exchange rate in Taylor rules: A Re-Assessment
Richard T. Froyen and
Alfred Guender ()
Economic Modelling, 2018, vol. 73, issue C, 140-151
Examining alternative flexible inflation targeting strategies, we find that a small concern for real exchange rate stability as a policy goal matters. First, it warrants the inclusion of the real exchange rate in Taylor rules and, second, it is sufficient to improve the performance of Taylor rules relative to optimal policy. Gains are substantial because a small weight on real exchange rate fluctuations makes optimal policy less aggressive.
Keywords: CPI; Domestic inflation targeting; Taylor rules; Timeless perspective; Real exchange rate; E3; E5; F3 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:73:y:2018:i:c:p:140-151
Access Statistics for this article
Economic Modelling is currently edited by S. Hall and P. Pauly
More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().