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Abstract

This paper compares the capability of interest rate rules, namely, inflation targeting IT, price-leveltargeting PT and a combination of the two regime in a hybrid rule HT to improve social welfare in asmall-open-economy, DSGE-based, New-Keynesian model. Allowing for some inflation inertia, we developa small-open-economy version of the Calvo sticky-price model to investigate the relative ability ofIT, PT and HT to minimize the variability in domestic ination and the output gap. Our analyses showthat hybrid targeting outperforms other specifications and produces quantitatively good results, comparedto those regimes that target only price levels or inflation rates.



Item Type: MPRA Paper -

Original Title: Monetary policy conduct: A hybrid framework-

Language: English-

Keywords: Small-Open Economy, Monetary Policy, Hybrid Targeting-

Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; DeflationE - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their PoliciesE - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy-





Author: Douch, Mohamed

Source: https://mpra.ub.uni-muenchen.de/20715/



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