; ; ; "ActiveFedora::Aggregation::ListSource" . a , ; "Monetary Policy and Dutch Disease: The Case of Price and Wage Rigidity"; ; "batchuser@example.com"; "Hevia, Constantino", "Nicolini, Juan Pablo"; "Federal Reserve Bank of Minneapolis"; "Foreign exchange intervention", "Dutch disease", "Inflation targeting"; "F41 - Open Economy Macroeconomics", "F31 - Foreign Exchange"; "We study a model of a small open economy that specializes in the production of commodities and that exhibits frictions in the setting of both prices and wages. We study the optimal response of monetary and exchange rate policy following a positive (negative) shock to the price of the exportable that generates an appreciation (depreciation) of the local currency. According to the calibrated version of the model, deviations from full price stability can generate welfare gains that are equivalent to almost 0.5% of lifetime consumption, as long as there is a significant degree of rigidity in nominal wages. On the other hand, if the rigidity is concentrated in prices, the welfare gains can be at most 0.1% of lifetime consumption. We also show that a rule - formally defined in the paper - that resembles a \"dirty floating\" regime can approximate the optimal policy remarkably well. "^^; "2015-06-08"; "2019-05-20T18:26:39.618573436+00:00"^^; "https://doi.org/10.21034/wp.726"; ; "https://creativecommons.org/licenses/by-nc/4.0/"; "Wed Oct 23 17:44:42 2019"; "https://creativecommons.org/licenses/by-nc/4.0/"; "Research Paper"; "340", "562"; "Working paper (Federal Reserve Bank of Minneapolis. Research Department)"; "726"; "Foreign exchange intervention", "Inflation targeting", "Dutch disease"; ; ; ; ; "Federal Reserve Bank of Minneapolis. Research Department"; "Published in: _Series in Central Banking of the Central Bank of Chile_ (Vol. 22, Chapter 2, 2016, pp. 51-90)"^^; ; "Publication" . ; .