Bank of England Working Paper Series

RESEARCH - Bank of England Working Paper by Nicoletta Batini, Richard Harrison and Stephen P Millard. 'Monetary policy rules for an open economy'.


The most popular simple rule for the interest rate, due to Taylor, is meant to inform monetary policy in closed economies. On the other hand, its main open-economy alternative, Ball's rule based on a monetary conditions index (MCI), may perform poorly in the face of specific types of exchange rate shocks, and thus cannot offer guidance for the

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