scholarly journals On discretion versus commitment and the role of the direct exchange rate channel in a forward-looking open economy model

2005 ◽  
Vol 19 (3) ◽  
pp. 355-377 ◽  
Author(s):  
Alfred V. Guender
Keyword(s):  
Exchange Rate ◽  
Open Economy ◽  
Economy Model ◽  
Direct Exchange ◽  
Direct Exchange Rate Channel ◽  
Forward Looking

Modelling the Open Economy, Devaluation, and the Exchange Rate in Developing Countries

2020 ◽  
pp. 277-306
Author(s):  
Giovanni Andrea Cornia
Keyword(s):  
Developing Countries ◽  
Exchange Rate ◽  
Open Economy ◽  
Exchange Rate Volatility ◽  
Empirical Literature ◽  
Economy Model ◽  
Poor Countries ◽  
Pros And Cons ◽  
External Sector ◽  
The Impact

The chapter first examines the limitations of conventional open-economy macro models, such as the Mundell–Fleming model, when they are applied to developing countries. It discusses the Swan–Salter model and the three-sector dependent-economy model that better capture the reality of the external sector in poor countries. It then discusses the impact of devaluation under conditions of closed and open capital accounts and shows the limitation of a devaluation unaccompanied by structural measures in little diversified poor economies and in economies with large dollar liabilities. In this regard, it examines the results of the empirical literature on the contractionary or expansionary effect of devaluation in developing countries. Finally, it reviews the pros and cons of alternative exchange rate regimes, the impossible trinity theorem, and measures to control exchange rate volatility through capital controls.

The Role of the Exchange Rate as a Shock Absorber in a Small Open Economy

2004 ◽  
Vol 15 (1) ◽  
pp. 23-43 ◽  
Author(s):  
Hilde C. Bjørnland
Keyword(s):  
Exchange Rate ◽  
Open Economy ◽  
Shock Absorber ◽  
Small Open Economy ◽  
The Exchange Rate

Corporation Tax, the Exchange Rate, and Cross-Border Firm Mobility

2021 ◽  
Author(s):  
Wataru Johdo
Keyword(s):  
Exchange Rate ◽  
Open Economy ◽  
Corporate Tax ◽  
Economy Model ◽  
Tax Rate ◽  
Corporation Tax ◽  
New Open Economy Macroeconomics ◽  
Cross Border ◽  
Tax Reduction ◽  
Foreign Countries

In this paper, we extend a new open economy macroeconomics (NOEM) model to examine the effects of a corporate tax reduction on home and foreign countries. The feature of this open economy model is that cross-border relocation of firms is allowed. We show that (i) a reduction in the home corporate tax rate induces an exchange rate appreciation (depreciation) when the degree of cross-border firm mobility is large (small) and (ii) when the degree of cross-border firm mobility is large (small), a reduction in corporate tax is beneficial (detrimental) to the domestic country but detrimental (beneficial) to the foreign country.

Exchange rate expectations: The role of person specific forward looking variables

2009 ◽  
Vol 105 (3) ◽  
pp. 221-223 ◽  
Author(s):  
Isabell Koske ◽  
Georg Stadtmann
Keyword(s):  
Exchange Rate ◽  
Exchange Rate Expectations ◽  
Forward Looking

The Conduct of Fiscal Policy

1985 ◽  
Vol 113 ◽  
pp. 81-88 ◽  
Author(s):  
David Currie
Keyword(s):  
Exchange Rate ◽  
Fiscal Policy ◽  
Open Economy ◽  
Policy Design ◽  
Macroeconomic Policy ◽  
Policy Rules ◽  
Central Focus ◽  
Policy Appraisal ◽  
Forward Looking

The central focus of this paper is on the conduct of fiscal policy. But the influence of fiscal policy cannot sensibly be examined separately from other aspects of macroeconomic policy, such as monetary, exchange rate and incomes policies. Because of this, we the opportunity to range quite widely. Two broad themes emerge. The first concerns the consequences of consistent forward-looking expectations for the design of policy. The second concerns the global consequences of adopting generally in many countries policy rules designed in the single open economy context. Since policy appraisal is usually conducted in the single economy context, and policy design with consistent expectations is still relatively underdeveloped, it is useful to take stock of these two issues.

scholarly journals INEQUALITY AND INTERNATIONAL TRADE: THE ROLE OF SKILL-BIASED TECHNOLOGY AND SEARCH FRICTIONS

2016 ◽  
Vol 21 (3) ◽  
pp. 624-643 ◽  
Author(s):  
Moritz Ritter
Keyword(s):  
Open Economy ◽  
Small Open Economy ◽  
Heterogeneous Firms ◽  
Search Model ◽  
Search Frictions ◽  
Economy Model ◽  
Income Differences ◽  
Skill Groups ◽  
The U.S

I embed a competitive search model of the labor market into a small open economy model with heterogeneous firms and workers. Search frictions generate equilibrium unemployment and income inequality between identical workers, in addition to income differences between skill groups. A quantitative evaluation of the U.S. trade experience suggests that the effect of the increase in goods trade since 1980 may have contributed to the increase in the college premium, but not to the increase in residual inequality.

scholarly journals CAUTION OR ACTIVISM? MONETARY POLICY STRATEGIES IN AN OPEN ECONOMY

2007 ◽  
Vol 11 (4) ◽  
pp. 519-541 ◽  
Author(s):  
MARTIN ELLISON ◽  
LUCIO SARNO ◽  
JOUKO VILMUNEN
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Open Economy ◽  
Optimal Policy ◽  
Central Banks ◽  
Economy Model ◽  
The Real ◽  
Policy Strategies

We examine optimal policy in an open-economy model with uncertainty and learning, where monetary policy actions affect the economy through the real exchange rate channel. Our results show that the degree of caution or activism in optimal policy depends on whether central banks are in coordinated or uncoordinated equilibrium. If central banks coordinate their policy actions then activism is optimal. In contrast, if there is no coordination, caution prevails. In the latter case caution is optimal because it helps central banks to avoid exposing themselves to manipulative actions by other central banks.

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