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dc.contributor.authorFrankel, Jeffrey A.
dc.date.accessioned2012-09-27T15:12:59Z
dc.date.issued2011
dc.identifier.citationFrankel, Jeffrey A. 2011. A Comparison of Product Price Targeting and Other Monetary Anchor Options for Commodity Exporters in Latin America. Economia 12(1)en_US
dc.identifier.issn1529-7470en_US
dc.identifier.urihttp://nrs.harvard.edu/urn-3:HUL.InstRepos:9642641
dc.description.abstractSeven possible nominal variables are considered as candidates to be the anchor or target for monetary policy. The context is countries in Latin America and the Caribbean (LAC), which tend to be price takers on world markets, to produce commodity exports subject to volatile terms of trade, and to experience procyclical international finance. Three candidates are exchange rate pegs: to the dollar, euro and SDR. One candidate is orthodox Inflation Targeting. Three candidates represent proposals for a new sort of inflation targeting that differs from the usual focus on the CPI, in that prices of export commodities are given substantial weight and prices of imports are not: PEP (Peg the Export Price), PEPI (Peg an Export Price Index), and PPT (Product Price Targeting). The selling point of these production-based price indices is that each could serve as a nominal anchor while yet accommodating terms of trade shocks, in comparison to a CPI target. All seven nominal anchors deliver greater overall nominal price stability in our simulations than the inflationary historical monetary regimes actually followed by LAC countries (with the exception of Panama). A dollar peg does not particularly stabilize domestic commodity prices. As hypothesized, a product price target generally does a better job of stabilizing the real domestic prices of tradable goods than does a CPI target. CPI-targeters such as Brazil, Chile, and Peru respond to increases in world prices of imported oil with monetary policy that is sufficiently tight to appreciate their currencies, an undesirable property. A Product Price targeter or PEP country would respond to increases in world prices of its commodity exports by appreciation, a desirable property.en_US
dc.language.isoen_USen_US
dc.publisherBrookings Institution Pressen_US
dc.relation.isversionofhttp://dx.doi.org/10.1007/s11079-010-9184-y
dash.licenseOAP
dc.subjectinternational financeen_US
dc.subjectmonetary policyen_US
dc.subjectinternational tradeen_US
dc.subjectLatin America and the Caribbean (LAC)en_US
dc.subjectexchange ratesen_US
dc.titleA Comparison of Product Price Targeting and Other Monetary Anchor Options for Commodity Exporters in Latin Americaen_US
dc.typeJournal Articleen_US
dc.description.versionAccepted Manuscripten_US
dc.relation.journalEconomiaen_US
dash.depositing.authorFrankel, Jeffrey A.
dc.date.available2012-09-27T15:12:59Z
dash.affiliation.other
dash.affiliation.other
dc.identifier.doi10.1007/s11079-010-9184-y*
dash.contributor.affiliatedFrankel, Jeffrey


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