scenario of capital outflows. Second, the optimal policy mix depends on the underlying shock driving capital flows. FXI takes …

allow for a standard nominal interest rate shock and an inflation target shock. In response to the highly persistent … inflation target shock we largely find evidence of a Neo-Fisher effect: the nominal interest rate co-moves positively with … expectations do not adjust immediately to the target shock …

shock, is negative for expansionary depreciations and positive for contractionary ones. For this type of shock, interest … is strong or mild. Interest rates are predicted to also rise in response to an adverse net export shock in contractionary …

information with signal extraction, the realisation of a relatively less frequent shock leads the central bank to behave as if a …