TY  - BOOK
AU  - Calvo,Guillermo
AU  - Végh Gramont,Carlos A.
TI  - Interest Rate Targeting in a Small Open Economy: The Predetermined Exchange Rates Case 
T2  - IMF Working Papers; Working Paper
SN  - 145192142X :
SN  - 1018-5941
PY  - 1990///
CY  - Washington, D.C.
PB  - International Monetary Fund
KW  - Central Bank
KW  - imf
KW  - Inflation
KW  - Monetary Economics
KW  - Monetary Policy
KW  - Price Level
KW  - Argentina
KW  - Uruguay
N2  - An important hurdle in analyzing interest rate targeting is that standard models usually lead to price level or inflation rate indeterminacy. This paper develops a simple framework in which such problems do not arise because the bonds whose interest rate is controlled provide liquidity services. This framework is used to examine interest rate targeting in a small open economy under predetermined exchange rates. A permanent increase in the interest rate has no real effects. In contrast, a temporary increase in the interest rate leads to higher consumption and to a current account deficit that worsens over time
UR  - http://elibrary.imf.org/view/IMF001/03644-9781451921427/03644-9781451921427/03644-9781451921427.xml
UR  - http://www.imfbookstore.org/IMFORG/9781451921427
ER  -