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Financial globalization and monetary policy Author info | Abstract | Publisher info | Download info | Related research | Statistics Devereux, Michael B.
Sutherland, Alan
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Recent data show substantial increases in the size of gross external asset and liability positions. The implications of these developments for optimal conduct of monetary policy are analyzed in a standard open economy model which is augmented to allow for endogenous portfolio choice. The model shows that monetary policy takes on new importance due to its impact on nominal asset returns. Nevertheless, the case for price stability as an optimal monetary rule remains. In fact, it is reinforced. Even without nominal price rigidities, price stability is optimal because it enhances the risk sharing properties of nominal bonds.
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Article provided by Elsevier in its journal Journal of Monetary Economics .
Volume (Year): 55 (2008)
Issue (Month): 8 (November)
Pages: 1363-1375
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Handle: RePEc:eee:moneco:v:55:y:2008:i:8:p:1363-1375Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505566
For technical questions regarding this item, or to correct its listing, contact: (Heidi Boesdal).
Keywords: Portfolio choice International risk sharing Exchange rate ; Other versions of this item:
Paper Devereux, Michael B & Sutherland, Alan, 2007.
"Financial Globalization and Monetary Policy ,"
CEPR Discussion Papers
6147, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Michael B. Devereux & Alan Sutherland, 2007.
"Financial Globalization and Monetary Policy ,"
IMF Working Papers
07/279, International Monetary Fund.
[Downloadable!] Devereux, Michael B. & Sutherland, Alan, 2008.
"Financial globalization and monetary policy ,"
Discussion Paper Series 1: Economic Studies
2008,20, Deutsche Bundesbank, Research Centre.
[Downloadable!] References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Devereux, Michael B., 2004.
"Should the exchange rate be a shock absorber? ,"
Journal of International Economics ,
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[Downloadable!] (restricted)
Devereux, Michael B & Sutherland, Alan, 2007.
"Financial Globalization and Monetary Policy ,"
CEPR Discussion Papers
6147, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted)
Other versions:
Michael B. Devereux & Alan Sutherland, 2007.
"Financial Globalization and Monetary Policy ,"
IMF Working Papers
07/279, International Monetary Fund.
[Downloadable!] Devereux, Michael B. & Sutherland, Alan, 2008.
"Financial globalization and monetary policy ,"
Discussion Paper Series 1: Economic Studies
2008,20, Deutsche Bundesbank, Research Centre.
[Downloadable!] Devereux, Michael B. & Sutherland, Alan, 2008.
"Financial globalization and monetary policy ,"
Journal of Monetary Economics ,
Elsevier, vol. 55(8), pages 1363-1375, November.
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"Impact of globalization on monetary policy ,"
Proceedings ,
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Lane, Philip & Milesi-Ferretti, Gian Maria, .
"External Wealth of Nations ,"
Instructional Stata datasets for econometrics
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IMF Working Papers
07/283, International Monetary Fund.
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Other versions: Gianluca Benigno & Pierpaolo Benigno, 2003.
"Designing targeting rules for international monetary policy cooperation ,"
Working Paper Series
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"Price Stability in Open Economies ,"
Review of Economic Studies ,
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"Financial integration and the wealth effect of exchange rate fluctuations ,"
Journal of International Economics ,
Elsevier, vol. 75(2), pages 283-294, July.
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"International Portfolio Equilibrium and the Current Account ,"
CEPR Discussion Papers
5512, C.E.P.R. Discussion Papers.
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Michael B Devereux & Alan Sutherland, 2007.
" Country Portfolio Dynamics ,"
CDMA Conference Paper Series
0706, Centre for Dynamic Macroeconomic Analysis.
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"Portfolio Choice in a Monetary Open-Economy DSGE Model ,"
IMF Working Papers
05/165, International Monetary Fund.
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Other versions: Cole, Harold L. & Obstfeld, Maurice, 1991.
"Commodity trade and international risk sharing : How much do financial markets matter? ,"
Journal of Monetary Economics ,
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"International Capital Flows, Returns and World Financial Integration ,"
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11701, National Bureau of Economic Research, Inc.
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Other versions: Cedric Tille & Eric van Wincoop, 2007.
"International Capital Flows ,"
Working Papers
122007, Hong Kong Institute for Monetary Research.
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Other versions:
Eric Van Wincoop & Cedric Tille, 2007.
"International Capital Flows ,"
NBER Working Papers
12856, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Tille, Cédric & van Wincoop, Eric, 2008.
"International Capital Flows ,"
CEPR Discussion Papers
6705, C.E.P.R. Discussion Papers.
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Staff Reports
280, Federal Reserve Bank of New York.
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"THE EXTERNAL WEALTH OF NATIONS: Measures of Foreign Assets and Liabilities For Industrial and Developing Countries ,"
CEG Working Papers
20012, Trinity College Dublin, Department of Economics.
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Other versions:
Gian Maria Milesi-Ferretti & Philip R. Lane, 1999.
"The External Wealth of Nations - Measures of Foreign Assets and Liabilities for Industrial and Developing Countries ,"
IMF Working Papers
99/115, International Monetary Fund.
Lane, Philip R. & Milesi-Ferretti, Gian Maria, 1999.
"The External Wealth of Nations: Measures of Foreign Assets and Liabilities for Industrial and Developing Countries ,"
CEPR Discussion Papers
2231, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Philip Lane & Gian Maria Milesi-Ferretti, 2001.
"THE EXTERNAL WEALTH OF NATIONS: Measures of Foreign Assets and Liabilities For Industrial and Developing Countries ,"
Trinity Economics Papers
20014, Trinity College Dublin, Department of Economics.
[Downloadable!] Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2001.
"The external wealth of nations: measures of foreign assets and liabilities for industrial and developing countries ,"
Journal of International Economics ,
Elsevier, vol. 55(2), pages 263-294, December.
[Downloadable!] (restricted) Robert King & Alexander L. Wolman, 1999.
"What Should the Monetary Authority Do When Prices Are Sticky? ,"
NBER Chapters ,
in: Monetary Policy Rules, pages 349-404
National Bureau of Economic Research, Inc.
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Devereux, Michael B & Saito, Makoto, 2006.
"A Portfolio Theory of International Capital Flows ,"
CEPR Discussion Papers
5746, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted)
Other versions: Michael B. Devereux & Alan Sutherland, 2008.
"Country portfolios in open economy macro models ,"
Globalization and Monetary Policy Institute Working Paper
09, Federal Reserve Bank of Dallas.
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Other versions: David Bowman & Brian M. Doyle, 2003.
"New Keynesian, open-economy models and their implications for monetary policy ,"
International Finance Discussion Papers
762, Board of Governors of the Federal Reserve System (U.S.).
[Downloadable!]
Devereux, Michael B & Sutherland, Alan, 2006.
"Solving for Country Portfolios in Open Economy Macro Models ,"
CEPR Discussion Papers
5966, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted)
Other versions: Benigno, Pierpaolo, 2004.
"Optimal monetary policy in a currency area ,"
Journal of International Economics ,
Elsevier, vol. 63(2), pages 293-320, July.
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Other versions: Bacchetta, Philippe & van Wincoop, Eric, 2000.
"Trade in nominal assets and net international capital flows ,"
Journal of International Money and Finance ,
Elsevier, vol. 19(1), pages 55-72, February.
[Downloadable!] (restricted)
Other versions: Benigno, Pierpaolo, 2001.
"Price Stability with Imperfect Financial Integration ,"
CEPR Discussion Papers
2854, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted)
Other versions:
Pierpaolo Benigno, 2008.
"Price stability with imperfect financial integration ,"
Proceedings ,
Board of Governors of the Federal Reserve System (U.S.).
[Downloadable!] Pierpaolo Benigno, 2009.
"Price Stability with Imperfect Financial Integration ,"
Journal of Money, Credit and Banking ,
Blackwell Publishing, vol. 41(s1), pages 121-149, 02.
[Downloadable!] (restricted)
Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Enrique Martinez-Garcia, 2008.
"Globalization and monetary policy: an introduction ,"
Globalization and Monetary Policy Institute Working Paper
11, Federal Reserve Bank of Dallas.
[Downloadable!]
Devereux, Michael B. & Sutherland, Alan, 2008.
"Financial globalization and monetary policy ,"
Discussion Paper Series 1: Economic Studies
2008,20, Deutsche Bundesbank, Research Centre.
[Downloadable!]
Other versions:
Devereux, Michael B & Sutherland, Alan, 2007.
"Financial Globalization and Monetary Policy ,"
CEPR Discussion Papers
6147, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Michael B. Devereux & Alan Sutherland, 2007.
"Financial Globalization and Monetary Policy ,"
IMF Working Papers
07/279, International Monetary Fund.
[Downloadable!] Devereux, Michael B. & Sutherland, Alan, 2008.
"Financial globalization and monetary policy ,"
Journal of Monetary Economics ,
Elsevier, vol. 55(8), pages 1363-1375, November.
[Downloadable!] (restricted)
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