This paper studies a temporary exchange rate based stabilization plan in which agents face a sudden stop of capital inflows. The model generates a rising path of real interest rates in advance of the exchange rate collapse. This generates a time-dependent non-monotonic path of required premium...

This paper studies how the nature of shocks affects the optimal choice of monetary policy instruments in a small open economy. Three classic rules, fixed exchange rates, monetary targeting, and inflation targeting are studied and ranked by comparing with the optimal monetary policy under...

This is a technical Appendix to our forthcoming publication in the Review of Development Economics.

 This paper, in the spirit of Poole [Poole, William, 1970. The Optimal Choice of Monetary Policy Instruments in a Simple Macro Model. Quarterly Journal of Economics, 84, 192–216.], studies how differently monetary and fiscal shocks influence the appropriate choice of the monetary policy...

This paper studies both positive and normative aspects of quantity-based capital controls in a small open economy undergoing a temporary inflation stabilization plan. In the model, capital controls are implemented by choosing two policy variables: a ceiling on the private sector debt and a...

This is an Appendix to "The Optimal Choice of Monetary Policy Instruments in a Small Open Economy" Forthcoming in the Canadian Journal of Economics.

 This paper studies the choice of monetary policy regime in a small open economy underproductivity shocks and noise traders in forex markets. We focus on two simple rules: Â…xedexchange rates and in‡ation targeting. We contrast the above two rules against optimal policywith commitment....

We study production capacity utilization and emission permit utilization in a model where firms jointly produce a valued good and an environmental bad, pollution. Firms are ex ante identical but experience random productivity shocks after factor employment. A regulator imposes a cap-and-trade...

We study production capacity utilization and emission permit utilization in a model where firms jointly produce a valued good and an environmental bad, pollution. Firms are ex ante identical but experience random productivity shocks after factor employment. A regulator imposes a cap-and-trade...

Faced with real and nominal shocks, what should a benevolent central bank do, fix the money growth rate or target the inflation rate? In this paper, we make a first attempt at studying the optimal choice of monetary policy instruments in a micro-founded model of money. Specifically, we produce...