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RELATIVE PRICE DISTORTION AND OPTIMAL MONETARY POLICY IN OPEN ECONOMIES

윤택|김진일|ANDREW T. LEVIN
한국경제학회 (The Korean Economic Association)|2008.06|The Korean Economic Review|제24권 제1호|pp. 5-31

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참고문헌

키워드

InterdependenceOpen EconomyPrice DispersionRelative Price DistortionOptimal Policy.
주제분류경제학

초록

This paper provides a closed-form solution for optimal monetary policy in a two-country model with Calvo-type sticky prices. Initial price dispersion makes it suboptimal to completely stabilize the producer price index, and the optimal policy would entail a price-level targeting. The solution also indicates that the isomorphism of optimal policy rules between closed and open economy breaks down unless the utility function is logarithmic in consumption.

Abstract

This paper provides a closed-form solution for optimal monetary policy in a two-country model with Calvo-type sticky prices. Initial price dispersion makes it suboptimal to completely stabilize the producer price index, and the optimal policy would entail a price-level targeting. The solution also indicates that the isomorphism of optimal policy rules between closed and open economy breaks down unless the utility function is logarithmic in consumption.

참고문헌 (22)

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  22. Yun, Tack., "Optimal Monetary Policy with Relative Price Distortions", American Economomic Review, 95(1), pp.289~108 (2005)

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