scholarly journals Optimal Monetary Policy in an Estimated Local Currency Pricing Model

2012 ◽  
pp. 39-79 ◽  
Author(s):  
Eiji Okano ◽  
Masataka Eguchi ◽  
Hiroshi Gunji ◽  
Tomomi Miyazaki
Keyword(s):  
Monetary Policy ◽  
Pricing Model ◽  
Optimal Monetary Policy ◽  
Local Currency ◽  
Local Currency Pricing

scholarly journals Currency Misalignments and Optimal Monetary Policy: A Reexamination

2011 ◽  
Vol 101 (6) ◽  
pp. 2796-2822 ◽  
Author(s):  
Charles Engel
Keyword(s):  
Monetary Policy ◽  
Open Economy ◽  
Policy Implications ◽  
Optimal Monetary Policy ◽  
Price Inflation ◽  
Pricing To Market ◽  
Local Currency ◽  
Local Currency Pricing ◽  
Target Consumer ◽  
Currency Misalignment

This paper examines optimal monetary policy in an open-economy two-country world with sticky prices under pricing to market. We show that currency misalignments are inefficient and lower world welfare. We find that optimal policy must target consumer price inflation, the output gap, and the currency misalignment. The paper derives the loss function of a cooperative monetary policymaker and the optimal targeting rules. The model is a modified version of Clarida, Galí, and Gertler (JME, 2002). The key change is that we allow pricing to market or local-currency pricing and consider the policy implications of currency misalignments. JEL: E52, F31, F41

Local Currency Pricing versus Producer Currency Pricing: Direct Evidence from German Exporters

2008 ◽  
Vol 9 (2) ◽  
pp. 160-179 ◽  
Author(s):  
Ralf Fendel ◽  
Christoph Swonke ◽  
Michael Frenkel
Keyword(s):  
Open Economy ◽  
Direct Evidence ◽  
Law Of One Price ◽  
Price Setting ◽  
Optimal Monetary Policy ◽  
Rate System ◽  
Local Currency ◽  
Pricing Behavior ◽  
Local Currency Pricing ◽  
Exchange Rate System

Abstract In new open-economy macroeconomic models, the assumption on the pricing behavior of firms in international trade plays a central role. Whether firms apply producer currency pricing (PCP) or local currency pricing (LCP) crucially affects, for example, the design of optimal monetary policy or the choice of the optimal exchange rate system. However, empirical evidence has so far been mixed and is furthermore mostly of an indirect nature. This paper draws direct evidence on the price-setting behavior of German exporters from a questionnaire-based survey. We find that PCP applies in more integrated markets. Differences between LCP firms and PCP firms mainly exist with respect to the use of mark-ups and in the validity of the law of one price for their respective products.

On the Exchange Rate Policy

2010 ◽  
pp. 21-28
Author(s):  
K. Yudaeva
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Inflation Targeting ◽  
Exchange Rate Policy ◽  
Institutional Changes ◽  
Crisis Period ◽  
Local Currency ◽  
High Inflation ◽  
Rate Policy ◽  
The Exchange Rate

The level of trust in the local currency in Russia is very low largely because of relatively high inflation. As a result, Bank of Russia during crisis times can not afford monetary policy loosening and has to fight devaluation expectations. To change the situation in the post-crisis period Russia needs to live through a continuous period of low inflation. Modified inflation targeting can help achieve such a result. However, it should be amended with institutional changes, particularly development of hedging instruments.

Optimal Monetary Policy at the Zero Lower Bound

2015 ◽  
Author(s):  
Costas Azariadis ◽  
James Bullard ◽  
Aarti Singh ◽  
Jacek Suda
Keyword(s):  
Monetary Policy ◽  
Lower Bound ◽  
Zero Lower Bound ◽  
Optimal Monetary Policy
Sign in / Sign up

Export Citation Format

Share Document