EconPapers    
Economics at your fingertips  
 

Monetary Policy and the International Implications of the Phillips Curve in an Open Economy

George Alogoskoufis

No 183, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In this paper I examine optimal monetary policy and the informational implications of the Phillips curve in a stochastic model of a small open economy. It is assumed that the economy produces both traded and non-traded goods, that capital mobility is perfect and that the economy faces a variety of unanticipated transitory disturbances to demand, supply and the foreign sector. It is also assumed that wages are not only indexed to the price level, but also respond to the state of the labour market. If the authorities have only imperfect information about current disturbances, this gives independent informational content to wages, over and above the information conveyed by other aggregate prices. The optimal policy in this model involves not only intervention in the foreign exchange market but also accommodation of wage growth, as the exchange rate and wages are only partially correlated signals about the unobserved disturbances.

Keywords: Exchange Rates; Monetary Policy; Open Economy; Phillips Curve; Wages (search for similar items in EconPapers)
Date: 1987-06
References: Add references at CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=183 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:183

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... pers/dp.php?dpno=183

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ..
Bibliographic data for series maintained by (). This e-mail address is bad, please contact .

 
Page updated 2018-06-09
Handle: RePEc:cpr:ceprdp:183