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  • Author or Editor: Ricardo Ramalhete Moreira x
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Ricardo Ramalhete Moreira

Inflation targeting, primary surpluses and a floating exchange rate under supply and exchange-rate shocks can combine to create deleterious effects on the economic dynamic. This paper reports on computer simulation experiments using a dynamic and stochastic model that can incorporate different restrictions. In general, the data show that under supply and exchange-rate shocks, a better method for minimising social loss includes flexible inflation targeting, counter-cyclical primary surpluses and capital control without eliminating the floating exchange rate.