Monetary Policy Rules and Macroeconomic Stabilization in Small Open Economies under Behavioral FX Trading: Insights from Numerical Simulations

Christian Proaño

No 1102, Working Papers from New School for Social Research, Department of Economics

Abstract: In this paper the interaction between FX markets driven by trading based on behavioral forecasting rules and the macroeconomy of a small open economy is investigated. A special focus of the paper is set on the consequences of chartism or technical analysis for the stability at the macroeconomic level. Furthermore, the performance of alternative monetary policy rules concerning the overall stabilization of the economy is investigated through numerical analysis.

Keywords: Behavioral Expectations; Exchange Rate Dynamics; Monetary Policy (search for similar items in EconPapers)
JEL-codes: E44 E52 F3 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2011-09
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http://www.economicpolicyresearch.org/econ/2011/NSSR_WP_022011.pdf First version, 2011 (application/pdf)

Related works:
Journal Article: MONETARY POLICY RULES AND MACROECONOMIC STABILIZATION IN SMALL OPEN ECONOMIES UNDER BEHAVIORAL FX TRADING: INSIGHTS FROM NUMERICAL SIMULATIONS (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:new:wpaper:1102

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