International spillover effects and monetary policy activism

Anna Lipinska, Morten Spange () and Misa Tanaka
Additional contact information
Morten Spange: Danmarks Nationalbank

No 377, Bank of England working papers from Bank of England

Abstract: This paper examines how the preferences of a large economy’s central bank affect the trade-off between output and inflation volatility faced by the central bank of a small open economy by analysing the impact of a global cost-push shock. We demonstrate that under the assumption of producer currency pricing, the trade-off faced by the small open economy is likely to worsen as the foreign central bank becomes more focused on output stabilisation relative to inflation stabilisation; but the opposite is true in the case of local currency pricing.

Keywords: Open economy; policy trade-offs; producer versus local currency pricing (search for similar items in EconPapers)
JEL-codes: E58 F41 F42 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2009-11-27
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: International Spillover Effects and Monetary Policy Activism (2011)
Journal Article: International Spillover Effects and Monetary Policy Activism (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0377

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