Política Monetaria y la Enfermedad Holandesa: Rigidez de Precios y de Salarios

We study a model of small open economy that specializes in the production of commodities and that exhibits exogenous frictions in the setting of both prices and wages. We study the optimal response of monetary and exchange rate policy following a positive (negative) shock to the price of the exportable that generates an appreciation (depreciation) of the local currency. According to the calibrated version of the model, deviations from full price stability can generate welfare gains equivalent to almost 0.5% of life-time consumption, as long as there is enough degree of rigidity in nominal wages. On the other hand, if the rigidity is concentrated in prices, the welfare gains can at be at most 0.1% of life-time consumption. We also show that a rule —formally defined in the paper —that resembles a “dirty floating” regime can approximate remarkably well the optimal policy.