01769cas a2200253 a 4500 AALejournalIMF002176 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451845853 1018-5941 BD-DhAAL BD-DhAAL Moron, Eduardo. Monetary Policy Rules for Financially Vulnerable Economies / Eduardo Moron, Diego Winkelried. Washington, D.C. : International Monetary Fund, 2003. 1 online resource (36 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 One distinguishable characteristic of emerging market economies is that they are not financially robust. These economies are incapable of smoothing out large external shocks, as sudden capital outflows imply large and abrupt swings in the real exchange rate. Using a small open-economy model, this paper examines alternative monetary policy rules for economies with different degrees of liability dollarization. The paper answers the question of how efficient it is to use inflation targeting under high liability dollarization. Our findings suggest that it might be optimal to follow a nonlinear policy rule that defends the real exchange rate in a financially vulnerable economy. Mode of access: Internet Winkelried, Diego. IMF Working Papers; Working Paper ; No. 2003/039 Full text available on IMF http://elibrary.imf.org/view/journals/001/2003/039/001.2003.issue-039-en.xml IMF e-Library