The Resource Optimal monetary policy in open economies, Giancarlo Corsetti, Luca Dedola and Sylvain Leduc

Optimal monetary policy in open economies, Giancarlo Corsetti, Luca Dedola and Sylvain Leduc

Label
Optimal monetary policy in open economies
Title
Optimal monetary policy in open economies
Statement of responsibility
Giancarlo Corsetti, Luca Dedola and Sylvain Leduc
Creator
Contributor
Author
Subject
Language
eng
Summary
This chapter studies optimal monetary stabilization policy in interdependent open economies, by proposing a unified analytical framework systematizing the existing literature. In the model, the combination of complete exchange-rate pass-through ('producer currency pricing') and frictionless asset markets ensuring efficient risk sharing, results in a form of open-economy 'divine coincidence': in line with the prescriptions in the baseline New- Keynesian setting, the optimal monetary policy under cooperation is characterized by exclusively inward-looking targeting rules in domestic output gaps and GDP-deflator inflation. The chapter then examines deviations from this benchmark, when cross-country strategic policy interactions, incomplete exchange-rate pass-through ('local currency pricing') and asset market imperfections are accounted for. Namely, failure to internalize international monetary spillovers results in attempts to manipulate international relative prices to raise national welfare, causing inefficient real exchange rate fluctuations. Local currency pricing and incomplete asset markets (preventing efficient risk sharing) shift the focus of monetary stabilization to redressing domestic as well as external distortions: the targeting rules characterizing the optimal policy are not only in domestic output gaps and in.ation, but also in misalignments in the terms of trade and real exchange rates, and cross-country demand imbalances
Member of
Cataloging source
IT-FiEUI
http://library.link/vocab/creatorName
Corsetti, Giancarlo
Index
no index present
Literary form
non fiction
http://library.link/vocab/relatedWorkOrContributorDate
  • 1967-
  • 1969-
http://library.link/vocab/relatedWorkOrContributorName
  • Dedola, Luca
  • Leduc, Sylvain
  • European University Institute
Series statement
  • EUI working papers. ECO
  • EUI papers
Series volume
2010/35
http://library.link/vocab/subjectName
  • Monetary policy
  • Monetary policy
  • Economic stabilization
  • Foreign exchange rates
Label
Optimal monetary policy in open economies, Giancarlo Corsetti, Luca Dedola and Sylvain Leduc
Link
http://hdl.handle.net/1814/14555
Instantiates
Publication
Note
Keywords: Currency misalignments, demand imbalances, pass-through, asset markets and risk sharing, optimal targeting rules, international policy cooperation, E44, E52, E61, F41, F42
Bibliography note
Includes bibliographical references (pages 73-82)
Carrier category
volume
Carrier category code
  • nc
Carrier MARC source
rdacarrier.
Content category
text
Content type code
  • txt
Content type MARC source
rdacontent.
Control code
FIEb17037761
Dimensions
30 cm.
Extent
84 pages
Media category
unmediated
Media MARC source
rdamedia.
Media type code
  • n
Other physical details
illustrations
System control number
(OCoLC)785634750
Label
Optimal monetary policy in open economies, Giancarlo Corsetti, Luca Dedola and Sylvain Leduc
Link
http://hdl.handle.net/1814/14555
Publication
Note
Keywords: Currency misalignments, demand imbalances, pass-through, asset markets and risk sharing, optimal targeting rules, international policy cooperation, E44, E52, E61, F41, F42
Bibliography note
Includes bibliographical references (pages 73-82)
Carrier category
volume
Carrier category code
  • nc
Carrier MARC source
rdacarrier.
Content category
text
Content type code
  • txt
Content type MARC source
rdacontent.
Control code
FIEb17037761
Dimensions
30 cm.
Extent
84 pages
Media category
unmediated
Media MARC source
rdamedia.
Media type code
  • n
Other physical details
illustrations
System control number
(OCoLC)785634750

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