Income Distribution and Monetary Policy in Small Open Economies
AbstractThis paper investigates the role of income distribution in a small monetary model for policy analysis and assesses whether a central bank in a small open economy can improve economic performance by paying explicit attention to changes in income distribution. The study answers this question by reformulating a Ball-Svensson type macromodel, extended to incorporate both sluggish nominal wage and price adjustment and income distribution effects on aggregate demand. Further, it is observed that a simple price inflation targeting rule that does not react explicitly to changes in income distribution is incapable of achieving macrostability. The study shows that a simple rule that targets the productivity-adjusted nominal wage inflation rate is capable of achieving macrostability. These findings motivate income distribution sensitive monetary policy rules.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by IUP Publications in its journal The IUP Journal of Monetary Economics.
Volume (Year): V (2007)
Issue (Month): 1 (February)
Contact details of provider:
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (G R K Murty).
If references are entirely missing, you can add them using this form.