This paper discusses the design of monetary policy in a New Keynesian small open economy framework by introducing nominal wage rigidities and incomplete exchange rate pass-through on import prices. Three main findings are summarized. First, with the existence of an incomplete exchange rate pass-through and nominal wage rigidities, the optimal policy is to seek to minimize the output gap, the variance of domestic price and wage inflation, as well as deviations from the law of one price. Second, the CPI inflation targeting Taylor rule is welfare enhancing when there is a technological shock to the economy. The exception occurs when there is a foreign income shock, which minimizes welfare losses under the domestic inflation targeting Taylor rule. Last, two stylized Taylor rules turn out to be a bad approximation, but the modified Taylor rules that respond to the unemployment gap rather than the output gap are a closer approximation to the optimal policy.

中文翻译：

---

小型开放经济体中的汇率传递，名义工资刚性和货币政策

本文通过引入名义工资刚性和对进口价格的不完全汇率传递，讨论了新凯恩斯小开放经济框架下的货币政策设计。总结了三个主要发现。首先，在存在不完全的汇率传递和名义工资刚性的情况下，最佳政策是设法使产出差距，国内价格和工资通胀的差异以及与一价定律的偏差最小。其次，当经济受到技术冲击时，以泰勒规则为目标的CPI通胀会提高福利。当发生外国收入冲击时，会发生例外，这会在针对泰勒规则的国内通货膨胀下最大程度地减少福利损失。最后，两个程式化的泰勒规则证明是一个很差的近似值，