Monetary Policy and Competition Policy in a Two-Country, Two-Sector Model
This paper introduces different degrees of product market competition into Obsfeld and Rogoff's inter temporal monetary model. Competition is allowed to vary across sectors and countries. Contray to Obstfeld-Rogoff (1995), money retrains its log-run non-neutrality property when non-tradables are included and exchange rate overshooting takes place even under unitary elasticity of money demand. I find a modified version of the 'exchange rate magnification effect' stressed by Hau (2000). Furthermore, the competition parameter is interpreted as a policy instrument. This enables me to study competition enhancement in the European services sector and its implications for monetary policy. It is shown that, under certain conditions, enhanced competition can have an upward impact on the general price level.
|Date of creation:||Mar 2001|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.dnb.nl/en/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rauf Gönenç & Maria Maher & Giuseppe Nicoletti, 2000.
"The Implementation and the Effects of Regulatory Reform: Past Experience and Current Issues,"
OECD Economics Department Working Papers
251, OECD Publishing.
- Rauf Gönenç & Maria Maher & Giuseppe Nicoletti, 2001. "The Implementation and the Effects of Regulatory Reform: Past Experience and Current Issues," OECD Economic Studies, OECD Publishing, vol. 2001(1), pages 11-98.
- Hau, Harald, 2000. "Exchange rate determination: The role of factor price rigidities and nontradeables," Journal of International Economics, Elsevier, vol. 50(2), pages 421-447, April.
- Stiglitz, Joseph E, 1984. "Price Rigidities and Market Structure," American Economic Review, American Economic Association, vol. 74(2), pages 350-55, May.
- Giancarlo Corsetti & Paolo Pesenti, 1997.
"Welfare and Macroeconomic Interdependence,"
NBER Working Papers
6307, National Bureau of Economic Research, Inc.
- Lane, Philip R., 1997. "Inflation in open economies," Journal of International Economics, Elsevier, vol. 42(3-4), pages 327-347, May.
When requesting a correction, please mention this item's handle: RePEc:dnb:mebser:2001-2. 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: (Rob Vet)
If references are entirely missing, you can add them using this form.