@article{AlternativeTargetingRegimes:1300,
      recid = {1300},
      author = {Lam, Jean-Paul},
      title = {Alternative Targeting Regimes, Transmission Lags, and the  Exchange Rate Channel},
      publisher = {Bank of Canada},
      address = {2003},
      pages = {1 online resource (vi, 28 pages)},
      abstract = {Using a closed-economy model, Jensen (2002) and Walsh  (2003) have, respectively, shown that a policy regime that  optimally targets nominal income growth (NIT) or the change  in the output gap (SLT) outperforms a regime that targets  inflation, because NIT and SLT induce more inertia in the  actions of the central bank, effectively replicating the  outcome obtained under precommitment. The author obtains a  very different result when the analysis is extended to  open-economy models. Flexible CPI-inflation targeting  outperforms both SLT and NIT and is the most robust  targeting regime. The gains from targeting CPI inflation  are particularly large when the model features transmission  lags and/or departures from the uncovered interest parity  condition. The author also finds that the stabilization  bias inherent in discretionary policy is smaller in an  open-economy setting.},
      url = {http://www.oar-rao.bank-banque-canada.ca/record/1300},
      doi = {https://doi.org/10.34989/swp-2003-39},
}