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

In: NBER International Seminar on Macroeconomics 2007

  • Giancarlo Corsetti
  • Paolo Pesenti

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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This chapter was published in:
  • Richard Clarida & Francesco Giavazzi, 2009. "NBER International Seminar on Macroeconomics 2007," NBER Books, National Bureau of Economic Research, Inc, number clar07-1, May.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 3000.
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