Please use this identifier to cite or link to this item: http://hdl.handle.net/1822/1431

TitleInflation targeting and exchange rate co-ordination
Author(s)Alexandre, Fernando
Driffill, John
Spagnolo, Fabio
KeywordsInflation targeting
Taylor trule
Exchange rate coordination
Rational expectations
Issue dateApr-2001
PublisherUniversidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE)
Series/Report no.NIPE Working Paper series ; 9
Abstract(s)In a linear rational expectations two-country model, using an aggregate demand-aggregate supply framework, we analyze the effects of the adoption of an inflation targeting regime on exchange rate volatility and the possible scope for policy coordination. This analysis is conducted using optimized interest rate policy rules within a calibrated model. Rules for interest rates that respond either to exchange rates or to portfolio shocks give improved performance and permit gains from international coordination. Optimized Taylor Rules perform relatively well.
TypeWorking paper
URIhttp://hdl.handle.net/1822/1431
AccessOpen access
Appears in Collections:NIPE - Documentos de Trabalho

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