Show simple item record

dc.contributor.authorCaputo, Rodrigo
dc.date.accessioned2014-08-25T02:02:31Z
dc.date.available2014-08-25T02:02:31Z
dc.date.issued2009
dc.identifier.citationRevista de Análisis Económico 24(1): 2009, p. 55-99es_CL
dc.identifier.urihttp://repositorio.uahurtado.cl/handle/11242/1893
dc.descriptionThere is substantial evidence suggesting that central banks in open economies react to exchange rate fluctuations, in addition to expected inflation and output. In some developing countries this reaction is comparatively larger and it is nonlinear. In an estimated structural macromodel for Chile, this paper assesses the advantages and potential costs of adopting such a reaction function. We conclude that, in the face of most of the external shocks, a policy rule that responds to exchange rate misalignments smooths inflation and output variability, while marginally increasing interest rate fluctuations. On the other hand, for some domestic innovations such a rule performs poorly. When all the shocks are considered at the same time, this rule generates important welfare gains. Finally, when the volatility of external shocks rises, increasing the response to exchange rate misalignments brings welfare improvements. In fact, a more aggressive response to the exchange rate offsets the impact that greater external volatility has on output and inflation, at the cost of inducing higher interest rate fluctuations. In this way, one can interpret the nonlinear reaction to the exchange rate as an optimal response to a more volatile external environment.en_US
dc.language.isoen_USes_CL
dc.publisherILADES; Georgetown University; Universidad Alberto Hurtado. Facultad de Economía y Negocioses_CL
dc.rightsAttribution 3.0 Unportedes_CL
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/es_CL
dc.subject.lcshMacroeconomíaes_CL
dc.subject.lcshTipo de cambioes_CL
dc.subject.lcshInflación -- Chilees_CL
dc.titleExternal Shocks and Monetary Policy. Does it Pay to Respond to Exchange Rate Deviations?es_CL
dc.typeArtículoes_CL


Files in this item

Thumbnail

This item appears in the following Collection(s)

Show simple item record

Attribution 3.0 Unported
Except where otherwise noted, this item's license is described as Attribution 3.0 Unported

Universidad Alberto Hurtado
 © 2002-2015  DuraSpace - Modificado por Biblioteca UAH