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The Simple Geometry of Transmission and Stabilization in Closed and Open Economies

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  • Giancarlo Corsetti
  • Paolo Pesenti

Abstract

This paper provides an introduction to the recent literature on macroeconomic stabilization in closed and open economies. We present a stylized theoretical framework, and illustrate its main properties with the help of an intuitive graphical apparatus. Among the issues we discuss: optimal monetary policy and the welfare gains from macroeconomic stabilization; international transmission of real and monetary shocks and the role of exchange rate pass-through; the design of optimal exchange rate regimes and monetary coordination among interdependent economies.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11341.

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Date of creation: May 2005
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Publication status: published as Richard Clarida. "Comment on "The Simple Geometry of Transmission and Stabilization in Closed and Open Economies"," in Richard Clarida and Francesco Giavazzi, organizers, "NBER International Seminar on Macroeconomics 2007" University of Chicago Press (2008)
Handle: RePEc:nbr:nberwo:11341

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