dc.contributor.author | CORSETTI, Giancarlo | |
dc.contributor.author | PESENTI, Paolo | |
dc.date.accessioned | 2007-01-29T15:55:15Z | |
dc.date.available | 2007-01-29T15:55:15Z | |
dc.date.issued | 2005 | |
dc.identifier.citation | Journal of Monetary Economics, 2005, 52, 2, 281-305 | en |
dc.identifier.uri | https://hdl.handle.net/1814/6681 | |
dc.description.abstract | This paper provides a baseline general equilibrium model of optimal monetary policy among interdependent economies with monopolistic firms and nominal rigidities. An inward-looking policy of domestic price stabilization is not optimal when firms’ markups are exposed to currency fluctuations. Such a policy raises exchange rate volatility, leading foreign exporters to charge higher prices vis-à-vis increased uncertainty in the export market. As higher import prices reduce the purchasing power of domestic consumers, optimal monetary rules trade off a larger domestic output gap against lower consumer prices. Optimal rules in a world Nash equilibrium lead to less exchange rate volatility relative to both inward-looking rules and discretionary policies, even when the latter do not suffer from any inflationary (or deflationary) bias. Gains from international monetary cooperation are related in a non-monotonic way to the degree of exchange rate pass-through. | en |
dc.language.iso | en | en |
dc.relation.ispartof | Journal of Monetary Economics | |
dc.title | International Dimensions of Optimal Monetary Policy | en |
dc.type | Article | en |
dc.identifier.doi | 10.1016/j.jmoneco.2004.06.002 | |
dc.neeo.contributor | CORSETTI|Giancarlo|aut|EUI70002 | |
dc.neeo.contributor | PESENTI|Paolo|aut| | |
dc.identifier.volume | 52 | |
dc.identifier.startpage | 281 | |
dc.identifier.endpage | 305 | |
eui.subscribe.skip | true | |