01739cas a2200253 a 4500 AALejournalIMF001944 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451849646 1018-5941 BD-DhAAL BD-DhAAL Ostry, Jonathan. External Shocks and Inflation in Developing Countries Under a Real Exchange Rate Rule / Jonathan Ostry, Peter Montiel. Washington, D.C. : International Monetary Fund, 1992. 1 online resource (48 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper shows that the response of inflation to external shocks is very different when the authorities target the real exchange rate than when they follow a fixed exchange rate or a preannounced crawling peg. Specifically, shocks that would have no effect on the steady-state inflation rate under a fixed exchange rate are either inflationary or deflationary under a real exchange rate rule. Moreover, irrespective of the degree of capital mobility, the authorities will find it difficult to mitigate the destabilizing effects of real shocks on the price level by using monetary policy, except possibly in the very short run. Mode of access: Internet Montiel, Peter. IMF Working Papers; Working Paper ; No. 1992/075 Full text available on IMF http://elibrary.imf.org/view/journals/001/1992/075/001.1992.issue-075-en.xml IMF e-Library