New Study Reveals Optimal Monetary Policy Rules for Economic Stability
The article analyzes different monetary policy rules in Iran to find the best one. They use a welfare criterion to rank the rules based on how well they perform under different economic shocks. The managed exchange rate rule works best under demand or supply shocks, while domestic inflation targeting is better under real shocks. When it comes to inflation targeting, CPI inflation targeting is more effective than domestic inflation targeting under certain shocks.