IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/183.html
   My bibliography  Save this paper

Monetary Policy and the International Implications of the Phillips Curve in an Open Economy

Author

Listed:
  • Alogoskoufis, George

Abstract

In this paper I examine optimal monetary policy and the informational implications of the Phillips curve in a stochastic model of a small open economy. It is assumed that the economy produces both traded and non-traded goods, that capital mobility is perfect and that the economy faces a variety of unanticipated transitory disturbances to demand, supply and the foreign sector. It is also assumed that wages are not only indexed to the price level, but also respond to the state of the labour market. If the authorities have only imperfect information about current disturbances, this gives independent informational content to wages, over and above the information conveyed by other aggregate prices. The optimal policy in this model involves not only intervention in the foreign exchange market but also accommodation of wage growth, as the exchange rate and wages are only partially correlated signals about the unobserved disturbances.

Suggested Citation

  • Alogoskoufis, George, 1987. "Monetary Policy and the International Implications of the Phillips Curve in an Open Economy," CEPR Discussion Papers 183, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:183
    as

    Download full text from publisher

    File URL: http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=183
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:183. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.