Degree of openness and inflation targeting policy: model of a small open economy

Jihene Bousrih (University of Rennes 1, Rennes, France)

Journal of Financial Economic Policy

ISSN: 1757-6385

Publication date: 27 July 2012

Abstract

Purpose

The purpose of this paper is to deal with the dynamics of a Neo‐Keynesian model applied to a small open economy, in order to show the impact of commercial openness on the choice of the optimal inflation target.

Design/methodology/approach

The author uses a neo‐Keynesian model with calibration for Chile.

Findings

The results show that there is a relation between the degree of openness and the type of inflation targeting policy.

Originality/value

The originality of the paper is to use a neo‐Keynesian model to deal with a small open economy, which uses inflation targeting as a monetary rule.

Keywords

Citation

Bousrih, J. (2012), "Degree of openness and inflation targeting policy: model of a small open economy", Journal of Financial Economic Policy, Vol. 4 No. 3, pp. 232-246. https://doi.org/10.1108/17576381211245962

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Publisher

:

Emerald Group Publishing Limited

Copyright © 2012, Emerald Group Publishing Limited

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