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World Food Prices, the Terms of Trade-Real Exchange Rate Nexus, and Monetary Policy
Mr.Luis CatãoRoberto Chang
出版International Monetary Fund, 2013-05-17
主題Business & Economics / Economics / MacroeconomicsBusiness & Economics / Foreign ExchangeBusiness & Economics / Exports & Imports
ISBN14843978789781484397879
URLhttp://books.google.com.hk/books?id=Xj0No6z3LQQC&hl=&source=gbs_api
EBookSAMPLE
註釋How should monetary policy respond to large fluctuations in world food prices? We study this question in an open economy model in which imported food has a larger weight in domestic consumption than abroad and international risk sharing can be imperfect. A key novelty is that the real exchange rate and the terms of trade can move in opposite directions in response to world food price shocks. This exacerbates the policy trade-off between stabilizing output prices vis a vis the real exchange rate, to an extent that depends on risk sharing and the price elasticity of exports. Under perfect risk sharing, targeting the headline CPI welfare-dominates targeting the PPI if the variance of food price shocks is not too small and the export price elasticity is realistically high. In such a case, however, targeting forecast CPI is a superior choice. With incomplete risk sharing, PPI targeting is clearly a winner.