Monetary Policy and Redistribution in Open Economies

Xing Guo, Pablo Ottonello and Diego J. Perez

No 28213, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study how monetary policy affects the asymmetric effects of globalization. To this end, we build an open-economy heterogeneous-agent New Keynesian model (HANK), in which households differ in their income, wealth, and real and financial integration with international markets. We use the model to reassess classic questions in international macroeconomics, but from a distributional perspective: What are the international spillovers of policies and shocks, how do alternative exchange-rate regimes compare, and what are the implications for monetary policy of the international price system. Our results indicate the presence of a trade-off between aggregate stabilization and inequality in consumption responses to external shocks. The asymmetric effects of globalization can be smaller for economies with higher international integration.

JEL-codes: E21 E52 F3 F32 F41 F6 (search for similar items in EconPapers)
Date: 2020-12
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac, nep-mon and nep-opm
Note: EFG IFM ME
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Citations: View citations in EconPapers (10)

Published as Xing Guo & Pablo Ottonello & Diego J. Perez, 2023. "Monetary Policy and Redistribution in Open Economies," Journal of Political Economy Macroeconomics, vol 1(1), pages 191-241.

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Working Paper: Monetary Policy and Redistribution in Open Economies (2022)
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