02217cas a2200277 a 4500 AALejournalIMF013299 230101c9999 xx r poo 0 0eng d 5.00 USD 9781475545401 1018-5941 BD-DhAAL BD-DhAAL Benes, Jaromir. Modeling Sterilized Interventions and Balance Sheet Effects of Monetary Policy in a New-Keynesian Framework / Jaromir Benes, Andrew Berg, Rafael Portillo, David Vavra. Washington, D.C. : International Monetary Fund, 2013. 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 We study a wide range of hybrid inflation-targeting (IT) and managed exchange rate regimes, analyzing their implications for inflation, output and the exchange rate in the presence of various domestic and external shocks. To this end, we develop an open economy new-Keynesian model featuring sterilized interventions in the foreign exchange (FX) market as an additional central bank instrument operating alongside the Taylor rule, and affecting the economy through portfolio balance sheet effects in the financial sector. We find that there can be advantages to combining IT with some degree of exchange rate management via FX interventions. Unlike "pure" IT or exchange rate management via interest rates, FX interventions can help insulate the economy against certain shocks, especially shocks to international financial conditions. However, managing the exchange rate through FX interventions may also hinder necessary exchange rate adjustments, e.g., in the presence of terms of trade shocks. Mode of access: Internet Berg, Andrew. Portillo, Rafael. Vavra, David. IMF Working Papers; Working Paper ; No. 2013/011 Full text available on IMF http://elibrary.imf.org/view/journals/001/2013/011/001.2013.issue-011-en.xml IMF e-Library