Monetary Rules for Small, Open, Emerging Economies

No 9568, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper develops a variant of the IMF's Global Economic Model (GEM) suitable to analyze macroeconomic dynamics in open economies, and uses it to assess the effectiveness of Taylor rules and Inflation-Forecast-Based (IFB) rules in stabilizing variability in output and inflation. Our findings suggest that a simple IFB rule that does not rely upon any direct estimates of the equilibrium real interest rate and places a relatively high weight on the inflation forecast may perform better in small open economies than conventional Taylor rules.

JEL-codes: C51 E31 (search for similar items in EconPapers)
Date: 2003-03
New Economics Papers: this item is included in nep-mac
Note: IFM
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Citations: View citations in EconPapers (301)

Published as Laxton, Douglas and Paolo Pesenti. "Monetary Rules For Small, Open, Emerging Economies," Journal of Monetary Economics, 2003, v50(5,Jul), 110-1146.

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