Optimal monetary policy in open economies revisited
This paper revisits optimal monetary policy in open economies, in particular, focusing on the noncooperative policy game under local currency pricing in a two-country dynamic stochastic general equilibrium model. We first derive the quadratic loss functions which noncooperative policy makers aim to minimize. Then, we show that noncooperative policy makers face extra trade-offs regarding stabilizing real marginal costs induced by deviations from the law of one price under local currency...[Show more]
|Collections||ANU Research Publications|
|Source:||Journal of International Economics|
|Access Rights:||Open Access|
|01_Fujiwara_Optimal_Monetary_2017.pdf||308.05 kB||Adobe PDF|
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