This paper studies the stabilization and welfare properties of various monetary policy regimes in a tractable framework suitable for the analysis of monetary policy in a small open economy environment with imperfect pass-through and inflation indexation. Using welfare criteria to evaluate the best monetary policy, results show that price-level targeting performs well and provides an alternative method for conducting successful monetary policy in the case of a small-open economy. Benefits of price-level targeting rules noted in the literature for closed economies also translate to the small open economy setting once allowing for the combination of inflation inertia and exchange rate imperfect pass-through. As the exchange rate is an important element of the transmission of monetary policy, movements in these variable and other foreign variables often account for a significant part of the variation in the consumer price index via their direct effect on the price of imported goods. Imperfect exchange rate pass-through favors the choice of price-level targeting over consumer price index inflation targeting.

中文翻译：

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小规模开放经济中的货币政策传递不完善

本文在一个适用于在不完全传递和通胀指数化的小型开放经济环境下分析货币政策的易处理框架中研究了各种货币政策制度的稳定性和福利性质。使用福利标准来评估最佳货币政策，结果表明价格水平目标表现良好，并为在小型开放经济体的情况下实施成功的货币政策提供了一种替代方法。文献中提到的封闭经济体价格水平目标规则的好处也转化为小型开放经济体设置，一旦允许通胀惯性和汇率不完美传递相结合。由于汇率是货币政策传导的重要因素，通过对进口商品价格的直接影响，这些变量和其他外国变量的变动往往是消费价格指数变化的重要组成部分。不完美的汇率传递有利于选择价格水平目标而不是消费者价格指数通胀目标。