A copy of this work was available on the public web and has been preserved in the Wayback Machine. The capture dates from 2020; you can also visit the original URL.
The file type is application/pdf
.
Optimal Monetary Policy in Open Economies Revisited
2016
Federal Reserve Bank of Dallas, Globalization and Monetary Policy Institute Working Papers
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 pricing,
doi:10.24149/gwp272
fatcat:amt2dhjzjffm5befzayawed5eq