World Food Prices and Monetary Policy
IMF Working Papers, July 1, 2010
Source details
- Canonical URL
- World Food Prices and Monetary Policy
Other formats
Bibliographic details
- Authors: Roberto Chang, Luis Catão
- Published: July 1, 2010
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781455201440.001
Overview
- Title: World Food Prices and Monetary Policy
- Authors: Roberto Chang, Luis Catão
- Date: July 1, 2010
- Series: Working Paper No. 2010/161
- Issue: 161
- Volume: 2010
- Pages: 66
- DOI: https://doi.org/10.5089/9781455201440.001
- ISBN: 9781455201440
- ISSN: 1018-5941
- Format note present: Preview Citation lists access date "accessed 9/12/2026" in the Chicago citation shown on the page.
Research question and model
- Examines how monetary policy in small open economies should react to imported world food price shocks.
- Uses a canonical open economy setting with sticky prices.
- Incorporates food as playing a distinctive role in utility.
Key findings
- World food price shocks affect natural output and other macroeconomic aggregates.
- The authors derive a second order approximation to welfare to evaluate policy performance.
- Numerical calibrations indicate that:
- Broad CPI targeting is welfare-superior to alternative policy rules
- This welfare superiority holds once the variance of food price shocks is sufficiently large as in real world data
Policy implication
- Prefer monetary policy frameworks that implement broad CPI targeting when economies face large variance in imported food price shocks.
Subject classifications and keywords
- Subject: Commodity price shocks, Consumer price indexes, Consumption, Inflation, Producer price indexes
- Keywords: exchange rate, WP
Additional notes on publication
- The working paper includes a disclaimer: "This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate."
Source: IMF Working Papers landing page for "World Food Prices and Monetary Policy" (Roberto Chang, Luis Catão, July 1, 2010).