02379cas a2200289 a 4500 AALejournalIMF022595 230101c9999 xx r poo 0 0eng d 5.00 USD 9798400204371 1018-5941 BD-DhAAL BD-DhAAL Cantelmo, Alessandro. Monetary Policy in Disaster-Prone Developing Countries / Alessandro Cantelmo, Nikos Fatouros, Giovanni Melina, Chris Papageorgiou. Washington, D.C. : International Monetary Fund, 2022. 1 online resource (64 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 analyzes monetary policy regimes in emerging and developing economies where climate-related natural disasters are major macroeconomic shocks. A narrative analysis of IMF reports published around the occurrence of natural disasters documents their impact on important macroeconomic variables and monetary policy responses. While countries with at least some degree of monetary policy independence typically react by tightening the monetary policy stance, in a sizable number of cases monetary policy was accommodated. Given the lack of consensus on best practices in these circumstances, a small open-economy New-Keynesian model with disaster shocks is leveraged to evaluate welfare under alternative monetary policy rules. Results suggest that responding to inflation to an extent sufficient to keep inflation expectations anchored, while allowing temporary deviations from its target is the welfare maximizing policy. Alternative regimes such as strict inflation targeting, exchange rate pegs, or Taylor rules explicitly responding to economic activity or the exchange rate would be welfare-detrimental. Mode of access: Internet Monetary Policy and Central Banking imf Fatouros, Nikos. Melina, Giovanni. Papageorgiou, Chris. IMF Working Papers; Working Paper ;No. 2022/067 Full text available on IMF https://elibrary.imf.org/openurl?genre=journal&issn=1018-5941&volume=2022&issue=067 IMF e-Library