Format:
Online-Ressource (16 p)
Edition:
Online-Ausg.
ISBN:
1475505248
,
9781475505245
Series Statement:
IMF Working Papers Working Paper No. 12/176
Content:
Pacific Islands countries are vulnerable to commodity price shocks, and this poses challenges to monetary policy. The high degree of exchange rate pass-through to headline inflation and the weak monetary transmission mechanism in PICs suggest a greater efficacy of exchange rate changes in affecting inflation rather than monetary policy. To assess the tradeoff between the use of the exchange rate and monetary policy in macroeconomic stabilization, we employ a model-based approach to examine the optimal policy in response to the historical distribution of exogenous shocks in a Pacific Island (Tonga). The empirical evidence and model simulations tilt in the favor of exchange rate policy given the close relationship between exchange rate changes and headline inflation and the low interest rate sensitivity of aggregate demand
Additional Edition:
Erscheint auch als Druck-Ausgabe Peiris, Shanaka Global Commodity Prices, Monetary Transmission, and Exchange Rate Pass-Through in the Pacific Islands Washington, D.C. : International Monetary Fund, 2012 ISBN 9781475505245
Language:
English
Keywords:
Graue Literatur
DOI:
10.5089/9781475505245.001
Bookmarklink
