Current account dynamics and optimal monetary policy in a small-open economy
AbstractThis paper studies a small open economy with two sectors. In a perfect foresight, rational expectation general equilibrium model, with sticky prices in the non-traded goods sector, the current account responses to monetary shocks depend on the elasticity of substitution between consumption and risk aversion, the country's initial net foreign asset position, and the degree of monopolistic competition. The current account reacts quite efficiently to technological shocks in a small open economy. The welfare gain for households from adopting optimal monetary policy in contrast to constant money growth rule is quantitatively small.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Inderscience Enterprises Ltd in its journal Int. J. of Monetary Economics and Finance.
Volume (Year): 2 (2009)
Issue (Month): 2 ()
Contact details of provider:
Web page: http://www.inderscience.com/browse/index.php?journalID=218
open economy macroeconomics; current account dynamics; optimal monetary policy; small open economy.;
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Itai Agur & Maria Demertzis, 2011.
""Leaning Against the Wind" and the Timing of Monetary Pollicy,"
DNB Working Papers, Netherlands Central Bank, Research Department
303, Netherlands Central Bank, Research Department.
- Agur, Itai & Demertzis, Maria, 2013. "“Leaning against the wind” and the timing of monetary policy," Journal of International Money and Finance, Elsevier, Elsevier, vol. 35(C), pages 179-194.
- Itai Agur & Maria Demertzis, 2013. "Leaning Against the Wind and the Timing of Monetary Policy," IMF Working Papers, International Monetary Fund 13/86, International Monetary Fund.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Graham Langley).
If references are entirely missing, you can add them using this form.