The DOI matches its Crossref record; 19 of the 19 references it cites were found in a registry or an index.
Monetary Policy and Exchange Rate Volatility in a Small Open Economy
Abstract
We lay out a small open economy version of the Calvo sticky price model, and show how the equilibrium dynamics can be reduced to a simple representation in domestic inflation and the output gap. We use the resulting framework to analyse the macroeconomic implications of three alternative rule-based policy regimes for the small open economy: domestic inflation and CPI-based Taylor rules, and an exchange rate peg. We show that a key difference among these regimes lies in the relative amount of exchange rate volatility that they entail. We also discuss a special case for which domestic inflation targeting constitutes the optimal policy, and where a simple second order approximation to the utility of the representative consumer can be derived and used to evaluate the welfare losses associated with the suboptimal rules.
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Cites
Discretion versus policy rules in practice
Taylor, J. B. (1993) · Carnegie-Rochester Conference Series on Public Policy · doi:10.1016/0167-2231(93)90009-l · Cited by 9,065
Staggered prices in a utility-maximizing framework
Calvo, G. A. (1983) · Journal of Monetary Economics · doi:10.1016/0304-3932(83)90060-0 · Cited by 7,901
INTEREST AND PRICES: FOUNDATIONS OF A THEORY OF MONETARY POLICY
Woodford, M., & WALSH, C. E. (2005) · Macroeconomic Dynamics · doi:10.1017/s1365100505040253 · Cited by 5,508
The Science of Monetary Policy: A New Keynesian Perspective
Clarida, R., Galí, J., & Gertler, M. (1999) · Journal of Economic Literature · doi:10.1257/jel.37.4.1661 · Cited by 4,916
The Solution of Linear Difference Models under Rational Expectations
Blanchard, O. J., & Kahn, C. M. (1980) · Econometrica · doi:10.2307/1912186 · Cited by 2,407
Optimal monetary policy with staggered wage and price contracts
Erceg, C. J., Henderson, D. W., & Levin, A. T. (2000) · Journal of Monetary Economics · doi:10.1016/s0304-3932(00)00028-3 · Cited by 2,277
Obstfeld, M., & Rogoff, K. (1995) · Journal of Political Economy · doi:10.1086/261997 · Cited by 2,112
Taylor, J. B. (1999) · University of Chicago Press eBooks · doi:10.7208/chicago/9780226791265.001.0001 · Cited by 1,678
Nominal price rigidity, money supply endogeneity, and business cycles
Yun, T. (1996) · Journal of Monetary Economics · doi:10.1016/0304-3932(96)01246-9 · Cited by 1,232
Can Sticky Price Models Generate Volatile and Persistent Real Exchange Rates?
Chari, V. V., Kehoe, P. J., & McGrattan, E. R. (2002) · The Review of Economic Studies · doi:10.1111/1467-937x.00216 · Cited by 1,142
Cited by
Bayesian estimation of an open economy DSGE model with incomplete pass-through
Adolfson, M., Laséen, S., Lindé, J., & Villani, M. (2007) · Journal of International Economics · doi:10.1016/j.jinteco.2007.01.003 · Cited by 849
The economic effects of trade policy uncertainty
Caldara, D., Iacoviello, M., Molligo, P., Prestipino, A., & Raffo, A. (2020) · Journal of Monetary Economics · doi:10.1016/j.jmoneco.2019.11.002 · Cited by 708
Limited asset markets participation, monetary policy and (inverted) aggregate demand logic
Bilbiie, F. O. (2008) · Journal of Economic Theory · doi:10.1016/j.jet.2007.07.008 · Cited by 431
Stock Market Wealth and the Real Economy: A Local Labor Market Approach
Chodorow-Reich, G., Nenov, P. T., & Simsek, A. (2021) · American Economic Review · doi:10.1257/aer.20200208 · Cited by 165
Metadata
- Authors
- Gali, J., & Monacelli, T.
- Venue
- Review of Economic Studies
- Publisher
- Oxford University Press (OUP)
- Published
- 2005-07
- Volume
- 72
- Issue
- 3
- Pages
- 707-734
- ISSN
- 0034-6527 (ISSN-L)
- 1467-937X
- OpenAlex
- W3021164001
- Cited by
- 1,451
- References
- 19
- FWCI
- 91.15
- Type
- journal article
- Language
- en
- Open access
- closed
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
