A note on stock price dynamics and monetary policy in a small open economy

Daisuke Ida, Mitsuhiro Okano and Satoshi Hoshino

MPRA Paper from University Library of Munich, Germany

Abstract: This note examines the role of stock price stabilization in a small open new Keynesian model. We show that stabilizing stock prices is desirable to attain a unique rational expectations equilibrium and that the open economy effect has a significant impact on the determinacy condition.

Keywords: Stock prices; Monetary policy rules; Terms of trade; Indeterminacy; Taylor principle (search for similar items in EconPapers)
JEL-codes: E52 E58 F41 (search for similar items in EconPapers)
Date: 2024-05-24
New Economics Papers: this item is included in nep-cba, nep-dge, nep-fdg, nep-mac, nep-mon and nep-opm
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:121050

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