Monetary Policy Rules in an Interdependent World
Robert Kollmann ()
No 4012, CEPR Discussion Papers from C.E.P.R. Discussion Papers
This Paper analyses the welfare effects of monetary policy rules in a quantitative business cycle model of a two-country world. The model features staggered price setting, and shocks to productivity and to the uncovered interest rate parity (UIP) condition. UIP shocks have a sizable negative effect on welfare, when trade links are strong. An exchange rate peg may raise world welfare, if the peg eliminates the UIP shocks. The model explains the empirical finding that more open economies are more likely to adopt a peg.
Keywords: business cycles; exchange rate regime; interest rate parity (search for similar items in EconPapers)
JEL-codes: E40 F30 F40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-ifn and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (47) Track citations by RSS feed
Downloads: (external link)
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 firstname.lastname@example.org
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:4012
Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=4012
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..
Series data maintained by (). This e-mail address is bad, please contact .