Series: IMF Working Papers
Author(s): Marco Airaudo , Edward Buffie , and Luis-Felipe Zanna
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 08 March 2016
Keywords: Inflation Targeting, Exchange Rate, Indeterminacy, Taylor Principle, inflation, foreign exchange, central bank, Monetary Policy (Targets, Instruments, and Effects)
We analyze coordination of monetary and exchange rate policy in a two-sector model of a small open economy featuring imperfect substitution between domestic and foreign financial assets. Our central finding is that...