Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7346755 | Economic Modelling | 2018 | 12 Pages |
Abstract
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.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Richard T. Froyen, Alfred V. Guender,