Monetary Policy Under a Currency Board

Marius Jurgilas

No 2007-34, Working papers from University of Connecticut, Department of Economics

Abstract: The consensus view is that central banks under currency boards do not have tools for active monetary policy. In this paper, we analyze the foreign exchange fee as a monetary policy instrument that can be used by a central bank under a currency board. We develop a general equilibrium model showing that changes in this fee may have the same effects as a change in the monetary policy stance. Thus central banks under the currency board are shown to have an avenue to implement active monetary policy.

Keywords: interbank market; monetary policy; currency board (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2007-09
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:uct:uconnp:2007-34

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