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

  • 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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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11341.

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Date of creation: May 2005
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Publication status: published as Comment on "The Simple Geometry of Transmission and Stabilization in Closed and Open Economies" , Richard Clarida . in NBER International Seminar on Macroeconomics 2007 , Clarida and Giavazzi. 2008
Handle: RePEc:nbr:nberwo:11341
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