Optimal Monetary Policy and Limited Enforcement in a Small Open Economy
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This paper analyzes the optimal monetary policy problem on the basis of a small open New Keynesian dynamic stochastic general equilibrium (DSGE) model with enforcement constraints, where limited enforcement and limited spanning interact to create an endogenous debt limit. As a result, if there are fiscal policy measures to eliminate steady-state distortions, the inflation targeting regime is optimal even when there are enforcement constraints.
Abstract
This paper analyzes the optimal monetary policy problem on the basis of a small open New Keynesian dynamic stochastic general equilibrium (DSGE) model with enforcement constraints, where limited enforcement and limited spanning interact to create an endogenous debt limit. As a result, if there are fiscal policy measures to eliminate steady-state distortions, the inflation targeting regime is optimal even when there are enforcement constraints.
참고문헌 (13)
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