Do Fixed Exchange Rates Fetter Monetary Policy? A Credit View
AbstractThe Bernanke-Blinder credit-view model is expanded to encompass a small, open economy with fixed exchange rates. In contrast to conventional wisdom and traditional models, monetary policy is resurrected as a stabilization tool. Further, various financial sector shocks are shown to have real aggregate demand effects. We show that independent monetary policy actions can have substantive impacts on aggregate demand despite perfect capital mobility and adherence to a fixed exchange rate regime.
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Bibliographic InfoPaper provided by University of Delaware, Department of Economics in its series Working Papers with number 03-09.
Length: 18 pages
Date of creation: 2003
Date of revision:
Publication status: Published in Eastern Economic Journal, Vol. 33, No.2, Spring, 2007.
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Web page: http://www.lerner.udel.edu/departments/economics/department-economics/
More information through EDIRC
Money Supply; Credit; Money Multipliers; Open Economy Macroeconomics;
Other versions of this item:
- Burton A. Abrams & Russell F. Settle, 2007. "Do Fixed Exchange Rates Fetter Monetary Policy? A Credit View," Eastern Economic Journal, Eastern Economic Association, vol. 33(2), pages 193-205, Spring.
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
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