Home bias, exchange rate disconnect, and optimal exchange rate policy

Journal of International Money and Finance

Volumn 29, Issue 1, 2010, Pages 55-78

  Wang, Jian ^a  

^a FEDERAL RESERVE BANK OF DALLAS   (United States)

Author keywords

Exchange rate disconnect; Exchange rate volatility; Home bias; Optimal monetary policy

Indexed keywords

EID: 73049098338     PISSN: 02615606     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jimonfin.2008.12.010     Document Type: Article

References (61)

1. Asseery A., and Peel D. The effect of exchange rate volatility on exports. Economics Letters 37 (1991) 173-177
2. Atkeson, A., Burstein, A., 2005. Trade costs, pricing to market, and international relative prices. Working paper, UCLA.
3. Backus D., Kehoe P., and Kydland F. International real business cycles. Journal of Political Economy 100 (1992) 745-775
4. Ball L. Policy rules for open economies. In: Taylor J.B. (Ed). Monetary Policy Rules (1999), University of Chicago Press, Chicago
5. Baxter M., and Stockman A. Business cycles and the exchange-rate regime, some international evidence. Journal of Monetary Economics 23 (1989) 377-400
6. Bergin, P., 2004. How well can the new open economy macroeconomics explain the exchange rate and current account. Working paper, University of California, Davis.
7. Bergin P., Shin H.-C., and Tchakarov I. Does exchange rate variability matter for welfare? A quantitative investigation. European Economic Review 51 4 (2007) 1041-1058
8. Burstein A., Neves J., and Rebelo S. Distribution costs and real exchange rate dynamics during exchange-rate-based-stabilizations. Journal of Monetary Economics 50 (2003) 1189-1214
9. Campa M.J., and Goldberg L.S. Exchange rate pass through into import prices. Review of Economics and Statistics 87 4 (2005) 679-690
10. Calvo G.A. Staggered prices in a utility-maximizing framework. Journal of Monetary Economics 12 (1983) 383-398
11. Chari V., Kehoe P., and McGrattan E. Can sticky price models generate volatile and persistent real exchange rates?. Review of Economic Studies 69 3 (2002) 533-563
12. Clarida R., Gali J., and Gertler M. Monetary Policy rules in practice: some international evidence. European Economic Review 42 (1998) 1033-1067
13. Clark T.E. The responses of prices at different stages of production to monetary policy shocks. Review of Economics and Statistics 12 (1999) 383-398
14. Cole H., and Obstfeld M. Commodity trade and international risk sharing. Journal of Monetary Economics 28 (1991) 3-24
15. Constantinides G.M. Habit formation: a resolution of the equity premium puzzle. Journal of Political Economy 98 (1990) 519-543
16. Corsetti G., Pesenti P., Roubini N., and Tille C. Competitive devaluations: toward a welfare-based approach. Journal of International Economics 51 (2000) 217-241
17. Deaton A. Life-cycle models of consumption: is the evidence consistent with the theory?. In: Bewley T. (Ed). Advances in Econometrics Fifth World Congress vol. 2 (1987), Cambridge University Press 121-148
18. Devereux M., and Engel C. Exchange rate pass-through, exchange rate volatility, and exchange rate disconnect. Journal of Monetary Economics 49 (2002) 913-940
19. Devereux M., and Engel C. Monetary policy in the open economy revisited: price setting and exchange rate flexibility. The Review of Economic Studies 70 (2003) 765-783
20. Devereux M., and Engel C. Expenditure switching vs. real exchange rate stabilization: competing objectives for exchange rate policy, forthcoming. Journal of Monetary Economics (2007)
21. Dong, W., 2006. Expenditure-switching effect and the exchange rate regime debate. Working paper, The Bank of Canada.
22. Duarte M., and Stockman A. Rational expectations and exchange rates. Journal of Monetary Economics 52 (2005) 3-29
23. Engel C. The forward discount anomaly and the risk premium: a survey of recent evidence. Journal of Empirical Finance 3 (1996) 123-192
24. Flood R., and Rose A. Fixing exchange rates: a virtual quest for fundamentals. Journal of Monetary Economics 36 (1995) 3-37
25. Ghironi F., and Melitz M. International trade and macroeconomic dynamics with heterogenous firms. Quarterly Journal of Economics CXX (2005) 865-915
26. Hansen G. Indivisible labor and the business cycle. Journal of Monetary Economics 16 (1985) 309-327
27. Harrigan J. OECD imports and trade barriers in 1983. Journal of International Economics 35 (1993) 91-111
28. Hau H. Real exchange rate volatility and economic openness: theory and evidence. Journal of Money, Credit and Banking 34 (2002) 611-630
29. Helpman E. The structure of foreign trade. Journal of Economics Perspectives 13 (1999) 121-144
30. Huang K., and Liu Z. Inflation to target: what inflation to target. Journal of Monetary Economics 52 (2005) 1435-1462
31. Jeanne O., and Rose A. Noise trading and exchange rate regimes. Quarterly Journal of Economics 117 (2002) 537-569
32. Kim J., and Kim S. Spurious welfare reversals in international business cycle models. Journal of International Economics 60 (2003) 471-500
33. Kim, J., Kim, S., Schaumburg, E., Sims, C.A., 2003. Calculating and using second order accurate solutions of discrete time dynamic equilibrium models, Working paper.
34. Klein M., and Shambaugh J. Fixed exchange rate and trade. Journal of International Economics 70 (2006) 359-383
35. Kollmann R. Welfare effects of a monetary union: the role of trade openness. Journal of the European Economic Association 2 (2004) 289-301
36. Koray F., and Lastrapes W. Real Exchange Rate volatility and U.S. bilateral trade: a VAR approach. Review of Economics and Statistics 71 (1989) 708-712
37. Kumhof, M., Laxton, D., Naknoi, K., 2008. Does the exchange rate belong in monetary policy rule? New answers from a DSGE model with endogenous tradability and trade frictions. Working Paper, IMF and Purdue University.
38. Leith, C.,Wren-Lewis, S., 2006. The optimal monetary policy response to exchange rate misalignments. Center for Dynamic Macroeconomic Analysis Conference Papers.
39. Lewis K. Puzzles in international financial markets. In: Grossman G., and Rogoff K. (Eds). Handbook of International Economics vol. III (1995), Elsevier, Amsterdam 1913-1971
40. Means, G., 1935. Industrial prices and their relative inflexibility. US Senate Document 13, 74th Congress, 1st Session, Washington, D.C.
41. Mumtaz, H., Oomen, O., Wang, J., 2006. Exchange rate pass-through into U.K. Import Prices. The Bank of England Working paper No 312.
42. Naknoi K. Real exchange rate fluctuations, endogenous tradability and exchange rate regimes. Journal of Monetary Economics 55 3 (2008) 645-663
43. Obstfeld M. International macroeconomics: beyond the Mundell-Fleming model. IMF Staff Papers 47 Special issue (2001) 1-39
44. Obstfeld M. perspectives from the new open-economy macroeconomics. Money and Economic Studies (December 2002) 23-46 Exchange rates and adjustment(Special edition)
45. Obstfeld, M., 2004. Pricing-to-market, the interest rule and the exchange rate. Working paper, University of Carlifornia, Berkeley.
46. Obstfeld M., and Rogoff K. The mirage of fixed exchange rates. Journal of Economic Perspectives 9 (1995) 73-96
47. Obstfeld M., and Rogoff K. The six major puzzles in international macroeconomics: is there a common cause?. NBER Macroeconomics Annual 15 (2000) 339-390
48. Obstfeld M., and Rogoff K. New direction for stochastic open economy models. Journal of International Economics 50 (2000) 117-153
49. Obstfeld M., and Rogoff K. Global implications of self-oriented national monetary rules. Quarterly Journal of Economics May (2002) 503-535
50. Pastine I. Speculation and the decision to abandon a fixed exchange rate regime. Journal of International Economics 57 (2002) 197-229
51. Reinhart C., and Rogoff K. The modern history of exchange rate arrangements: a reinterpretation. Quarterly Journal of Economics CXIX 1 (2002) 1-48
52. Rotemberg J.J., and Woodford M. Interest rate rules in an estimated sticky price model. In: Taylor J.B. (Ed). Monetary Policy Rules (1999), University of Chicago Press, Chicago
53. Schmitt-Grohé S., and Uribe M. Closing small open economy models. Journal of International Economics 61 (2003) 163-185
54. Schmitt-Grohé S., and Uribe M. Solving dynamic general equilibrium models using a second-order approximation to the policy function. Journal of Economic Dynamics and Control 28 (2004) 755-775
55. Schmitt-Grohé, S., Uribe, M., 2004b. Optimal simple and implementable monetary and fiscal rules. NBER Working paper no. 10253.
56. Svensson L.E.O. Open-economy inflation targeting. Journal of International Economics 50 1 (2000) 155-183
57. Taylor J. Robustness and efficiencies of monetary policy rules as guidelines for interest rate setting by the European central bank. Journal of Monetary Economics 43 3 (1999) 655-679
58. Taylor J. The role of the exchange rate in monetary policy rules. American Economic Review 91 (2001) 263-267
59. Tesar L. Evaluating the gains from international risksharing. Carnegie-Rochester Conference Series on Public Policy 42 (1995) 95-143
60. West, K., 2004. Monetary policy and the volatility of real exchange rates in New Zealand. NBER Working Paper No. 10280.
61. Yun T. Nominal price rigidity, money supply endogeneity, and business cycles. Journal of Monetary Economics 37 (1996) 345-370