01873cas a2200265 a 4500 AALejournalIMF006039 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451873818 1018-5941 BD-DhAAL BD-DhAAL Garcia, Carlos. Hybrid Inflation Targeting Regimes / Carlos Garcia, Jorge Restrepo, Scott Roger. Washington, D.C. : International Monetary Fund, 2009. 1 online resource (57 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 uses a DSGE model to examine whether including the exchange rate explicitly in the central bank's policy reaction function can improve macroeconomic performance. It is found that including an element of exchange rate smoothing in the policy reaction function is helpful both for financially robust advanced economies and for financially vulnerable emerging economies in handling risk premium shocks. As long as the weight placed on exchange rate smoothing is relatively small, the effects on inflation and output volatility in the event of demand and cost-push shocks are minimal. Financially vulnerable emerging economies are especially likely to benefit from some exhange rate smoothing because of the perverse impact of exchange rate movements on activity. Mode of access: Internet Restrepo, Jorge. Roger, Scott. IMF Working Papers; Working Paper ; No. 2009/234 Full text available on IMF http://elibrary.imf.org/view/journals/001/2009/234/001.2009.issue-234-en.xml IMF e-Library