Monetary policy and exchange rate volatility in a small open economy

Review of Economic Studies

Volumn 72, Issue 3, 2005, Pages 707-734

  Galí, Jordi ^a   Monacelli, Tommaso ^b  

^a CEPR   (Spain)

^b BOCCONI UNIVERSITY   (Italy)

Author keywords

[No Author keywords available]

Indexed keywords

EXCHANGE RATE; MODELING; MONETARY POLICY;

EID: 22144493780     PISSN: 00346527     EISSN: None     Source Type: Journal    
DOI: 10.1111/j.1467-937X.2005.00349.x     Document Type: Article

References (36)

1. BACCHETTA, P. and van WINCOOP, E. (2000), "Does Exchange Rate Stability Increase Trade and Welfare?", American Economic Review, 90 (5), 1093-1109.
2. BACCHETTA, P. and van WINCOOP, E. (2003), "Why Do Consumer Prices React Less than Import Prices to Exchange Rates?", Journal of the European Economic Association, Papers and Proceedings, 1 (April-May), 622-670.
3. BACKUS, D. and SMITH, G. (1993), "Consumption and Real Exchange Rates in Dynamic Exchange Economies with Nontraded Goods", Journal of International Economics, 35, 297-316.
4. BENIGNO, G. and BENIGNO, P. (2003), "Price Stability in Open Economies", Review of Economic Studies, 70 (4), 743-764.
5. BENIGNO, P. and WOODFORD, M. (2004), "Inflation Stabilization and Welfare: The Case of Large Distortions" (Unpublished Manuscript, Princeton University).
6. BETTS, C. and DEVEREUX, M. B. (2000), "Exchange Rate Dynamics in a Model of Pricing-to-Market", Journal of International Economics, 50 (1), 215-244.
7. BLANCHARD, O. and KHAN, C. (1980), "The Solution of Linear Difference Models with Rational Expectations", Econometrica, 48, 1305-1311.
8. BULLARD, J. and MITRA, K. (2002), "Learning About Monetary Policy Rules", Journal of Monetary Economics, 49 (6), 1105-1129.
9. CALVO, G. (1983), "Staggered Prices in a Utility Maximizing Framework", Journal of Monetary Economics, 12, 383-398.
10. CHARI, V. V., KEHOE, P. and McGRATTAN, E. (2002), "Monetary Shocks and Real Exchange Rates in Sticky Price Models of International Business Cycles", Review of Economic Studies, 69, 533-563.
11. CLARIDA, R., GALÍ, J. and GERTLER, M. (1999), "The Science of Monetary Policy: A New Keynesian Perspective", Journal of Economic Literature, 37, 1661-1707.
12. CLARIDA, R., GALÍ, J. and GERTLER, M. (2001), "Optimal Monetary Policy in Open vs. Closed Economies: An Integrated Approach", American Economic Review, 91 (2), 248-252.
13. CLARIDA, R., GALÍ, J. and GERTLER, M. (2002), "A Simple Framework for International Monetary Policy Analysis", Journal of Monetary Economics, 49 (5), 879-904.
14. CORSETTI, G. and PESENTI, P. (2001), "Welfare and Macroeconomic Interdependence", Quarterly Journal of Economics, CXVI (2), 421-446.
15. CORSETTI, G. and PESENTI, P. (2005), "International Dimensions of Optimal Monetary Policy", Journal of Monetary Economics, 52 (2), 281-305.
16. DEVEREUX, M. B. and ENGEL, C. (2002), "Exchange Rate Pass-Through, Exchange Rate Volatility, and Exchange Rate Disconnect", Journal of Monetary Economics, 913-940.
17. ERCEG, C. J., HENDERSON, D. W. and LEVINE, A. T. (2000), "Optimal Monetary Policy with Staggered Wage and Price Contracts", Journal of Monetary Economics, 46, 281-313.
18. GALÍ, J. (2003), "New Perspectives on Monetary Policy, Inflation, and the Business Cycle", in M. Dewatripont, L. Hansen and S. Turnovsky (eds.) Advances in Economics and Econometrics, Vol. III (Cambridge: Cambridge University Press).
19. GOODFRIEND, M. and KING, R. G. (2001), "The Case for Price Stability", in Garcia-Herrero et al. (eds.) Why Price Stability? (European Central Bank).
20. KING, R. G. and WOLMAN, A. L. (1996), "Inflation Targeting in a St. Louis Model of the 21st Century", Federal Reserve Bank of St. Louis Review, 78 (3) (NBER WP #5507).
21. KOLLMANN, R. (2001), "The Exchange Rate in a Dynamic Optimizing Current Account Model with Nominal Rigidities: A Quantitative Investigation", Journal of International Economics, 55, 243-262.
22. KOLLMANN, R. (2002), "Monetary Policy Rules in the Open Economy: Effects on Welfare and Business Cycles", Journal of Monetary Economics, 49, 989-1015.
23. LANE, P. R. (2001), "The New Open Economy Macroeconomics: A Survey", Journal of International Economics, 54, 235-266.
24. MCCALLUM, B. and NELSON, E. (2000), "Monetary Policy for an Open Economy: An Alternative Framework with Optimizing Agents and Sticky Prices", Oxford Review of Economic Policy, 16, 74-91.
25. MONACELLI, T. (2004), "Into the Mussa Puzzle: Monetary Policy Regimes and the Real Exchange Rate in a Small Open Economy", Journal of International Economics, 62, 191-217.
26. MUSSA, M. (1986), "Nominal Exchange Regimes and the Behavior of Real Exchange Rates: Evidence and Implications", Carnegie-Rochester Conference Series on Public Policy, 25, 117-214.
27. OBSTFELD, M. and ROGOFF, K. (1995), "Exchange Rate Dynamics Redux", Journal of Political Economy, 103 (3), 624-660.
28. OBSTFELD, M. and ROGOFF, K. (1999), "New Directions for Stochastic Open Economy Models", Journal of International Economics, 50 (1), 117-153.
29. PAPPA, E. (2004), "Should the Fed and the ECB Cooperate? Optimal Monetary Policy in a Two-Country World", Journal of Monetary Economics, 51 (4), 753-779.
30. PARRADO, E. and VELASCO, A. (2002), "Optimal Interest Rate Policy in a Small Open Economy" (NBER WP# 8721).
31. ROTEMBERG, J. and WOODFORD, M. (1999), "Interest Rate Rules in an Estimated Sticky Price Model", in J. B. Taylor (ed.) Monetary Policy Rules (Chicago: University of Chicago Press).
32. SCHMITT-GROHé, S. and URIBE, M. (2001), "Stabilization Policy and the Costs of Dollarization", Journal of Money, Credit, and Banking, 33, 482-509.
33. SVENSSON, L. E. O. (2000), "Open-Economy Inflation Targeting", Journal of International Economics, 50 (1).
34. TAYLOR, J. B. (ed) (1999) Monetary Policy Rules (Chicago: University of Chicago Press).
35. WOODFORD, M. (2003) Interest and Prices: Foundations of a Theory of Monetary Policy (Princeton, NJ: Princeton University Press).
36. YUN, T. (1996), "Monetary Policy, Nominal Price Rigidity, and Business Cycles", Journal of Monetary Economics, 37, 345-370.