Research Discussion Paper – RDP 9806 Policy Rules for Open Economies

Contents

• Introduction
• The Model
• Efficient Instrument Rules
• Other Instrument Rules
• The Perils of Inflation Targeting
• Long-run Inflation Targets
• Conclusion
• Appendix A: Domestic Goods and Imports
• Appendix B: The Variances of Output and Inflation
• References

This paper draws on research conducted while the author was visiting the Reserve Bank of Australia, and was presented at the NBER Conference on Policy Rules, January 1998. I am grateful for research assistance from Qiming Chen, Nada Choueiri, Heiko Ebens, and for comments and advice from Bob Buckle, Pedro deLima, Eric Hansen, David Gruen, David Longworth, Tiff Macklem, Scott Roger, Thomas Sargent, John Taylor, and seminar participants at the Federal Reserve Bank of Kansas City and the Reserve Banks of Australia and Canada.