International Monetary Fund
700 19th Street
Washington DC 20431
Information about this author at RePEc
NBER Working Papers and Publications
|November 2012||Monetary Rules for Commodity Traders|
with Roberto Chang: w18536
We develop a dynamic model of a small open economy that trades commodities whose world prices are subject to realistic random fluctuations, and study the implications of monetary policy alternatives. The model is much more flexible than those of previous studies, especially in allowing to compare perfect risk sharing against financial autarky. In each case we show how to derive analytically optimal Ramsey allocations and flexible price allocations, and hence to examine the crucial role of behavioral elasticities, production structure, and capital mobility in determining the welfare properties of different monetary choices. Applying these insights to a calibrated example, we find that the impulse responses associated with PPI targeting track flexible price allocations closely, but can diver...
Published: Luis Catï¿½o & Roberto Chang, 2013. "Monetary Rules for Commodity Traders," IMF Economic Review, Palgrave Macmillan, vol. 61(1), pages 52-91, April. citation courtesy of
|December 2010||World Food Prices and Monetary Policy|
with Roberto Chang: w16563
In recent years, large fluctuations in world food prices have renewed interest in the question of how monetary policy in small open economies should react to imported price shocks. We address this issue in an open economy setting similar to previous ones except that food plays a distinctive role in utility. A key novelty of our model is that the real exchange rate and the terms of trade can move in opposite directions in response to food price shocks. This has several consequences for observables and for policy. Under a variety of model calibrations, broad CPI targeting emerges as welfare-superior to alternative policy rules once the variance of food price shocks is as large as in real world data.
Published: Catão, Luis A.V. & Chang, Roberto, 2015. "World food prices and monetary policy," Journal of Monetary Economics, Elsevier, vol. 75(C), pages 69-88. citation courtesy of
|July 2007||Sudden Stops and Currency Drops: A Historical Look|
in The Decline of Latin American Economies: Growth, Institutions, and Crises, Sebastian Edwards, Gerardo Esquivel and Graciela Márquez, editors