The Optimal Monetary Policy Response to Tariffs

Javier Bianchi and Louphou Coulibaly

No 33560, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: What is the optimal monetary policy response to tariffs? This paper explores this question within an open-economy New Keynesian model and shows that the optimal monetary policy response is expansionary, with inflation rising above and beyond the direct effects of tariffs. This result holds regardless of whether tariffs apply to consumption goods or intermediate inputs, whether the shock is temporary or permanent, and whether tariffs address other distortions.

JEL-codes: E24 E44 E52 F13 F41 (search for similar items in EconPapers)
Date: 2025-03
Note: EFG IFM ITI ME
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w33560.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
Working Paper: The Optimal Monetary Policy Response to Tariffs (2025)
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:nbr:nberwo:33560

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w33560
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().