Monetary policy, interest rate rules, and inflation targeting: some basic equivalences
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Date
2002
Authors
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Publisher
Banco Central de Chile
Abstract
Description
Monetary policy in small open economies is typically cast as a choice between an exchange rate anchor (fixed or predetermined exchange rates) and a money anchor (floating exchange rates). Under such regimes, the growth rate of the nominal anchor is set according to the desired long-run inflation rate. After undergoing a not necessarily painless adjustment process, the economy would eventually reach the long-run inflation rate.
Keywords
POLÍTICA MONETARIA, TASAS DE INTERÉS, INFLACIÓN, TIPO DE CAMBIO