The authors thank Nicola Borri for helpful discussions and comments, seminar participants at Central Bank of Chile, European Central Bank, Sveriges Riksbank, LUISS, Universit a di Salerno, participants at the Swiss National Bank conference on "Exchange Rate and External Adjustment", and Roger Meservey for professional editing. Pierpaolo Benigno acknowledges financial support form an ERC Startin...

The paper considers alternative monetary policy regimes within a calibrated macroeconomic model with a traded and a non-traded sector. Two classes of regimes are considered; in°ation targeting and exchange rate targeting. When the target variable is completely stabilized, both rules have poor stabilizing properties for all real variables nominal exchange rate targeting is even dynamically unsta...

one of the most important policies concerning the adjustment of foreign trade is to allocate foreign currency by establishing an exchange control system. the mechanism of this would be so that the central bank operates or supervises all transactions concerning foreign exchange. however, the controlling system, like all other international systems of payment, operates with some adjustments and i...

There are various causes for inflation in macroeconomics. One of the important channels of experiencing inflation is through the international economy caused by external shocks. In this context, the impact of exchange rate volatilities on domestic prices known as Exchange Rate Pass-Through (ERPT) plays a vital role. The present paper deals with the impact of Exchange Rate Pass-Through on inflat...

a r t i c l e i n f o This paper introduces a strategy to model a small open economy, whose central bank has established two simultaneous policy objectives: an inflation target, and a maximum limit for nominal exchange rate volatility. In line with the Tinbergen–Aoki condition, the monetary authority establishes two policy instruments, one for accomplishing each target: the monetary policy rate...

Abstract This paper analyses the impact of central bank interventions in inflation targeting regime. The results empirical studies this show if there is a shock exchange rate, which would lead to depreciation may decide mush instability on foreign market with interventions, thereby preventing sudden rate depreciation, then require smaller reaction by interest rate. Namely, through greatly absor...

The conduct of monetary policy in an oil economy with a managed floating exchange rate regime can be challenging in an environment of fiscal dominance and incomplete transition to a market economy. The Five-Year Development Plans provide a natural benchmark against which to assess monetary policy performance in Iran. Price stability has proved elusive, with liquidity growth targets constan...