| 来源类型 | Discussion paper
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| 规范类型 | 论文
|
| 来源ID | DP5631
|
| DP5631 Trend Breaks, Long-Run Restrictions and the Contractionary Effects of Technology Improvements |
| John Fernald
|
| 发表日期 | 2006-04-18
|
| 出版年 | 2006
|
| 语种 | 英语
|
| 摘要 | Models of stabilization in open economy traditionally emphasize the role of exchange rates as a substitute for nominal price flexibility in fostering relative price adjustment. This view has been recently criticized on the ground that, to the extent that prices are sticky in local currency, the exchange rate does not play the stabilizing role envisioned by the received wisdom. An important question is whether, for this very reason, stabilization policies should limit exchange rate movements, or even eliminate them altogether. In this paper, I re-assess this issue by extending the Corsetti and Pesenti (2001) model to allow for home bias in consumption | so that I can exploit the advantages of closed-form solutions. While this extension leaves most properties of the model unaffected, home bias implies that the real exchange rate in an efficient equilibrium is not constant, but fluctuates with the terms of trade. The weight that monetary authorities optimally place on stabilizing domestic marginal costs is increasing in Home bias: with asymmetric shocks, fixed exchange rates are incompatible with efficient monetary rules. Yet, the adverse welfare consequences of exchange rate movements constrain the optimal intensity of monetary responses to domestic shocks. Openness matters: in our specification each country produces an equal share of the world value added; the lower the import content of consumption, the higher the exchange rate volatility implied by optimal stabilization rules. In relatively closed economy, optimal monetary rules tend to converge, regardless of the nature of nominal rigidities in the exports market. |
| 主题 | International Macroeconomics
|
| 关键词 | Optimal monetary policy
Nominal rigidities
Exchange rate pass-through
Exchange rate regimes
International policy cooperation
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| URL | https://cepr.org/publications/dp5631
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| 来源智库 | Centre for Economic Policy Research (United Kingdom)
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| 资源类型 | 智库出版物
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| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/534481
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推荐引用方式
GB/T 7714 |
John Fernald. DP5631 Trend Breaks, Long-Run Restrictions and the Contractionary Effects of Technology Improvements. 2006.
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