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Current account and exchange rate behaviour under inflation targeting in a small open economy

Francisco Nadal De Simone

Published date:
Reference:
G97/4
JEL classification:
E13, E52, F41
A model of a small open economy is used to analyse the behaviour of the current account and the real exchange rate in a regime of inflation targeting a la New Zealand. The steady state and the dynamic behaviour of the economy under various shocks are discussed.