Optimal Monetary Policy in Small Open Economies: Producer-Currency Pricing

Mikhail Dmitriev and Jonathan Hoddenbagh
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Mikhail Dmitriev: Florida State University

International Journal of Central Banking, 2021, vol. 17, issue 2, 297-338

Abstract: We establish the share of exports in production as a sufficient statistic for optimal noncooperative monetary policy. Under financial autarky, markups positively co-move with the export share. For complete markets, markups should be procyclical if the export share is procyclical. When central banks cooperate, markups are constant under complete markets, and countercyclical under financial autarky.

JEL-codes: E50 F41 F42 (search for similar items in EconPapers)
Date: 2021
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Working Paper: Optimal Monetary Policy in Small Open Economies: Producer Currency Pricing (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ijc:ijcjou:y:2021:q:2:a:8

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