On the Hump-Shaped Output Effect of Monetary Policy in an Open Economy

Christian Pierdzioch and Serkan Yener

No 1214, Kiel Working Papers from Kiel Institute for the World Economy

Abstract: Results of empirical research have revealed a characteristic hump-shaped effect of monetary policy shocks on output: the effect builds to a peak after several months and then gradually dies out. We analyze, in the context of a "new open economy macroeconomics" model, factors that imply a hump- shaped effect of a monetary policy shock on output. We find that a hump- shaped effect of output is likely to result if the model features a "catching up with the Joneses" effect, pricing-to-market behavior of firms, and imperfect international financial market integration.

Keywords: Monetary policy; Catching up with the Joneses; Pricing-to-market; International financial markets (search for similar items in EconPapers)
JEL-codes: F31 F32 F41 (search for similar items in EconPapers)
Date: 2004
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Journal Article: On the hump-shaped output effect of monetary policy in an open economy (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1214

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