TY  - RPRT
        AU  - Prasad, Eswar
AU  - Zhang, Boyang
        TI  - Distributional Effects of Monetary Policy in Emerging Market Economies
        PY  - 2015/Aug/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 9272
        UR  - https://www.iza.org/publications/dp9272
        AB  - We develop a two-sector, heterogeneous-agent model with incomplete financial markets to study the distributional effects and aggregate welfare implications of alternative monetary policy rules in emerging market economies. Relative to inflation targeting, exchange rate management benefits households in the tradable goods sector but in the long run these households are worse off due to higher consumption volatility. A fixed exchange rate reduces the welfare of these households and aggregate welfare when the economy is hit by positive shocks to nontradable goods productivity or foreign interest rates. Fiscal policy can more efficiently achieve similar short-run distributional objectives as exchange rate management.
        KW  - monetary policy rules
KW  - exchange rate management
KW  - interest rate smoothing
KW  - distributional effects
KW  - emerging markets
KW  - financial frictions
KW  - inflation targeting
        ER  -