TY - BOOK ID - 11270971 TI - Hybrid Inflation Targeting Regimes AU - García, Carlos AU - Restrepo, Jorge. AU - Roger, Scott. AU - International Monetary Fund. PY - 2009 SN - 1451917996 9786612844355 1451873816 1282844350 1452741980 146237896X PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Finance KW - Business & Economics KW - Money KW - Inflation (Finance) KW - Anti-inflationary policies. KW - Antiinflationary policies KW - Government policy KW - Economic policy KW - Price regulation KW - Natural rate of unemployment KW - Foreign Exchange KW - Inflation KW - Investments: General KW - Money and Monetary Policy KW - Price Level KW - Deflation KW - Investment KW - Capital KW - Intangible Capital KW - Capacity KW - Monetary Policy KW - Currency KW - Foreign exchange KW - Macroeconomics KW - Monetary economics KW - Exchange rates KW - Return on investment KW - Inflation targeting KW - Real exchange rates KW - Prices KW - Saving and investment KW - Monetary policy KW - Singapore UR - https://www.unicat.be/uniCat?func=search&query=sysid:11270971 AB - This paper uses a DSGE model to examine whether including the exchange rate explicitly in the central bank's policy reaction function can improve macroeconomic performance. It is found that including an element of exchange rate smoothing in the policy reaction function is helpful both for financially robust advanced economies and for financially vulnerable emerging economies in handling risk premium shocks. As long as the weight placed on exchange rate smoothing is relatively small, the effects on inflation and output volatility in the event of demand and cost-push shocks are minimal. Financially vulnerable emerging economies are especially likely to benefit from some exhange rate smoothing because of the perverse impact of exchange rate movements on activity. ER -