TY  - JOUR
AU  - Laxton,Douglas
AU  - Pesenti,Paolo
TI  - Monetary Rules for Small, Open, Emerging Economies
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9568
PY  - 2003
Y2  - March 2003
UR  - http://www.nber.org/papers/w9568
L1  - http://www.nber.org/papers/w9568.pdf
N1  - Author contact info:
Douglas Laxton
International Monetary Fund
700 19th Street
Washington, DC  20431
E-Mail: dlaxton@imf.org

Paolo A. Pesenti
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045
Tel: 212/720-5493
Fax: 212/720-6831
E-Mail: paolo.pesenti@ny.frb.org
AB  - 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.
ER  -