Policy Responses to Exchange-rate Movements
AbstractThis paper examines policy responses to exchange-rate movements in a simple model of an open economy. The optimal response of monetary policy to an exchange-rate change depends on the source of the change: on whether the underlying shock is a shift in capital flows, manufactured exports, or commodity prices. The paper compares the modelâs prescriptions to the policies of an actual central bank, the Bank of Canada. Finally, the paper considers the role of fiscal policy in an open economy. Coordinated fiscal and monetary responses to exchange-rate movements stabilize output at the sectoral as well as aggregate level.
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Bibliographic InfoArticle provided by Springer in its journal Open Economies Review.
Volume (Year): 21 (2010)
Issue (Month): 2 (April)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=100323
Exchange rates; Monetary policy; Bank of Canada; E52; E63; F41;
Other versions of this item:
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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.:
- Laurence M. Ball, 2009.
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15173, National Bureau of Economic Research, Inc.
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- Laurence Ball, 2010.
"Policy Responses to Exchange-rate Movements,"
Open Economies Review,
Springer, vol. 21(2), pages 187-199, April.
- Waldyr Areosa & Marta Areosa, 2012. "The Signaling Effect of Exchange Rates: pass-through under dispersed information," Working Papers Series 282, Central Bank of Brazil, Research Department.
- Nannette Lindenberg & Frank Westermann, 2009.
"How Strong is the Case for Dollarization in Costa Rica? A Note on the Business Cycle Comovements with the United States,"
CESifo Working Paper Series
2785, CESifo Group Munich.
- Nannette Lindenberg & Frank Westermann, 2009. "How Strong is the Case for Dollarization in Costa Rica? A Note on the Business Cycle Comovements with the United States," Working Papers 79, Institute of Empirical Economic Research.
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