01674cas a2200253 a 4500 AALejournalIMF006594 230101c9999 xx r poo 0 0eng d 5.00 USD 9781455201440 1018-5941 BD-DhAAL BD-DhAAL Chang, Roberto. World Food Prices and Monetary Policy / Roberto Chang, Luis Catao. Washington, D.C. : International Monetary Fund, 2010. 1 online resource (66 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 The large swings in world food prices in recent years renew interest in the question of how monetary policy in small open economies should react to such imported price shocks. We examine this issue in a canonical open economy setting with sticky prices and where food plays a distinctive role in utility. We show how world food price shocks affect natural output and other aggregates, and derive a second order approximation to welfare. Numerical calibrations show broad CPI targeting to be welfare-superior to alternative policy rules once the variance of food price shocks is sufficiently large as in real world data. Mode of access: Internet Catao, Luis. IMF Working Papers; Working Paper ; No. 2010/161 Full text available on IMF http://elibrary.imf.org/view/journals/001/2010/161/001.2010.issue-161-en.xml IMF e-Library