The Responsiveness of Consumer Prices to Exchange Rates: A Synthesis of Some New Open Economy Macro Models
General equilibrium optimizing models with sticky nominal prices allow us to revisit questions about optimal monetary policy in open economies. If nominal prices are set in producers' currencies, appropriate monetary policy can reproduce the allocations under flexible prices. If nominal prices are set in consumers' currencies, stable nominal exchange rates may be desirable. In this case, a nominal exchange rate fixed at the PPP level can have desirable consequences for risk sharing, and nominal exchange rate flexibility cannot deliver optimal relative price changes. However, evidence shows that pass-through may be greater to import prices than to consumer prices. If prices are fixed for consumers, but importer-distributors face pass-through, then monetary policy makers face a trade-off that might require some control of nominal exchange rates, but not purely fixed rates. Copyright 2002 by Blackwell Publishers Ltd and The Victoria University of Manchester
If 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.
Volume (Year): 70 (2002)
Issue (Month): 0 (Supplement)
|Contact details of provider:|| Postal: |
Phone: (0)161 275 4868
Fax: (0)161 275 4812
Web page: http://www.blackwellpublishing.com/journal.asp?ref=1463-6786
More information through EDIRC
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=1463-6786|
When requesting a correction, please mention this item's handle: RePEc:bla:manchs:v:70:y:2002:i:0:p:1-15. See general 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: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.