International Spillover Effects and Monetary Policy Activism

Anna Lipinska, Morten Spange and Misa Tanaka

Journal of Money, Credit and Banking, 2011, vol. 43, issue 8, 1735-1748

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 analyzing 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 stabilization relative to inflation stabilization; but the opposite is true in the case of local currency pricing.

Date: 2011
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https://doi.org/10.1111/j.1538-4616.2011.00466.x

Related works:
Journal Article: International Spillover Effects and Monetary Policy Activism (2011)
Working Paper: International spillover effects and monetary policy activism (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:43:y:2011:i:8:p:1735-1748

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