Dennis, Richard - Federal Reserve Bank of San Francisco - 2000
the instrument with
policy responding (directly) to exchange rates, but not inflation.
Turning to the issue of whether … optimization problem.
To reduce the dimensions of the system we exploit the real exchange rate’s definition and
write the UIP …. Smets, (2001), ‘MCIs and Monetary Policy in Small Open Economies
Under Floating Exchange Rates’, European Economic Review …