02064cas a2200253 a 4500 AALejournalIMF011620 230101c9999 xx r poo 0 0eng d 5.00 USD 9781463931209 1018-5941 BD-DhAAL BD-DhAAL Rebei, Nooman. Price Subsidies and the Conduct of Monetary Policy / Nooman Rebei, Mohamed Safouane Ben Aissa. Washington, D.C. : International Monetary Fund, 2012. 1 online resource (43 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 investigates optimized monetary policy rules in the presence of government intervention to stabilize prices of certain categories of goods and services. The paper estimates a small-scale, structural equilibrium model with a sticky-price sector and a subsidized price sector for a large number of countries using Bayesian methods. The main result of this paper is that strict headline inflation targeting could be outperformed by sectoral inflation targeting, output gap stabilization, or a combination of these. In addition, several country cases exhibit lower performance of both headline and core inflation stabilization, the two most common policies in modern central banks' practices. For practical monetary policy design, we numerically identify country specific thresholds for the degree of government intervention in price setting under which core inflation targeting turns out to be the optimal choice in the context of implementable Taylor rules. Mode of access: Internet Ben Aissa, Mohamed Safouane. IMF Working Papers; Working Paper ; No. 2012/015 Full text available on IMF http://elibrary.imf.org/view/journals/001/2012/015/001.2012.issue-015-en.xml IMF e-Library