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Optimal Monetary Policy in Small Open Economies: Producer Currency Pricing

Mikhail Dmitriev and Jonathan Hoddenbagh ()
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Jonathan Hoddenbagh: Department of Economics, Johns Hopkins University

Working Papers from Department of Economics, Florida State University

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.

Keywords: open economy macroeconomics; optimal monetary policy; price stability (search for similar items in EconPapers)
JEL-codes: E50 F41 F42 (search for similar items in EconPapers)
Pages: 60
Date: 2019-10
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon, nep-opm and nep-ore
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