scholarly journals New Keynesian, Open-Economy Models and Their Implications for Monetary Policy

2003 ◽  
Author(s):  
David H. Bowman ◽  
Brian M. Doyle
Keyword(s):  
Monetary Policy ◽  
Open Economy ◽  
New Keynesian ◽  
Open Economy Models

scholarly journals New Keynesian, Open-Economy Models and Their Implications for Monetary Policy

2003 ◽  
Vol 2003 (762) ◽  
pp. 1-41 ◽  
Author(s):  
David Bowman ◽  
◽  
Brian M. Doyle
Keyword(s):  
Monetary Policy ◽  
Open Economy ◽  
New Keynesian ◽  
Open Economy Models

scholarly journals Fiscal and monetary policy in new Keynesian DSGE models

2014 ◽  
Author(s):  
Πέτρος Βαρθαλίτης
Keyword(s):  
Monetary Policy ◽  
Fiscal Policy ◽  
Open Economy ◽  
Small Open Economy ◽  
New Keynesian ◽  
Dsge Models ◽  
Dsge Model ◽  
Keynesian Model ◽  
Monetary And Fiscal Policy ◽  
Fiscal And Monetary Policy

This thesis is about monetary and fiscal policy in New Keynesian DSGE models. Chapter 2 presents the baseline New Keynesian DSGE model. Monetary policy is in the form of a simple interest rate Taylor-type policy rule, while fiscal policy is exogenous. Chapter 3 extends the model of Chapter 2 to include fiscal policy. Now, both monetary and fiscal policy are allowed to follow feedback rules. Chapter 4 sets up a New Keynesian model of a semi-small open economy with sovereign risk premia. Finally, Chapter 5 builds a New Keynesian DSGE model consisting of two heterogeneous countries participating in a monetary union.Throughout most of the thesis, policy is conducted via "simple", "implementable" and "optimized" feedback policy rules. Using such rules, the aim of policy is twofold: firslty, it aims to stabilize the economy when the latter is hit by shocks; secondly, it aims to improve the economy's resource allocation.

WHY JOIN A CURRENCY UNION? A NOTE ON THE IMPACT OF BELIEFS ON THE CHOICE OF MONETARY POLICY

2011 ◽  
Vol 16 (2) ◽  
pp. 320-334 ◽  
Author(s):  
Federico Ravenna
Keyword(s):  
Monetary Policy ◽  
Open Economy ◽  
Policy Maker ◽  
Small Open Economy ◽  
Optimal Choice ◽  
New Keynesian ◽  
Monetary Policies ◽  
Keynesian Model ◽  
The Impact ◽  
Better Than

We argue that a fixed exchange rate can be an optimal choice even if a policy maker could commit to the first-best monetary policy whenever the private sector's beliefs reflect incomplete information about the policy maker's dependability. This model implies that joining a currency area may be optimal for its impact not on the behavior of the policy maker, but on the beliefs of the private sector. Monetary policies are evaluated using a new Keynesian model of a small open economy solved under imperfect policy credibility. We quantify the minimum distance between announced policy and the private sector's beliefs that is necessary for a peg to perform better than an independent monetary policy when the policy maker can commit to the first-best policy.

Delegating Optimal Monetary Policy Inertia in a Small-Open Economy

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Daisuke Ida ◽  
Mitsuhiro Okano
Keyword(s):  
Monetary Policy ◽  
Open Economy ◽  
Inflation Targeting ◽  
Small Open Economy ◽  
Central Banks ◽  
New Keynesian ◽  
Closed Economy ◽  
Optimal Monetary Policy ◽  
Nk Model ◽  
Exchange Rate Targeting

AbstractThis paper explores the delegation of several targeting regimes in a small open new Keynesian (NK) model and examines how central banks overcome stabilization bias in a small open NK model. Results indicate that both speed limit and real exchange rate targeting can carry the isomorphic properties of optimal monetary policy over to the closed economy. In addition, neither nominal income growth targeting nor CPI inflation targeting replicates a commitment policy. These findings provide new implications for optimal monetary policy in an open economy.

scholarly journals Structural Changes in Investment and the Waning Power of Monetary Policy

2021 ◽  
Author(s):  
Justin Bloesch ◽  
Jacob P. Weber
Keyword(s):  
Monetary Policy ◽  
Open Economy ◽  
Structural Changes ◽  
Small Open Economy ◽  
Value Added ◽  
New Keynesian ◽  
Secular Change ◽  
Labor Income ◽  
Labor Earnings ◽  
Investment Goods

We argue that secular change in both the production and composition of investment goods has weakened private investment's role in the transmission of monetary policy to labor earnings and consumption. We show analytically that fluctuations in the production of investment goods amplify the response of consumption to monetary policy shocks by varying labor income for hand-to-mouth agents. We document three secular changes that weaken this channel: (i) labor's share of value added in investment goods production has declined, (ii) the import share of investment goods has risen, and (iii) the composition of investment has shifted towards components that are less responsive to monetary policy. A small open economy, two agent New Keynesian model calibrated to match these facts implies a 38% and 26% weaker response of labor income and aggregate consumption, respectively, to real interest rate shocks in a 2010's economy relative to a 1960's economy.

scholarly journals Fiscal Consolidation in an Open Economy

2012 ◽  
Vol 102 (3) ◽  
pp. 186-191 ◽  
Author(s):  
Christopher J Erceg ◽  
Jesper Lindé
Keyword(s):  
Monetary Policy ◽  
Lower Bound ◽  
Open Economy ◽  
Small Open Economy ◽  
Currency Union ◽  
New Keynesian ◽  
Zero Lower Bound ◽  
Fiscal Consolidation ◽  
Monetary Regimes ◽  
The Impact

his paper uses a New Keynesian DSGE model of a small open economy to compare how the effects of fiscal consolidation differ depending on whether monetary policy is constrained by currency union membership or by the zero lower bound on policy rates. We show that there are important differences in the impact of fiscal shocks across these monetary regimes that depend both on the duration of the zero lower bound and on features that determine the responsiveness of inflation.

On the Sources of Inflation in Kenya

2018 ◽  
Author(s):  
Michal Andrle ◽  
Andrew Berg ◽  
R. Armando Morales ◽  
Rafael Portillo ◽  
Jan Vlcek
Keyword(s):  
Monetary Policy ◽  
Open Economy ◽  
Food Prices ◽  
Nominal Exchange Rate ◽  
Relative Price ◽  
New Keynesian ◽  
Macroeconomic Shocks ◽  
Imported Food ◽  
Business Cycle Dynamics ◽  
Food Inflation

The authors develop a semi-structural, New Keynesian open-economy model with separate food and non-food inflation dynamics to study the sources of inflation in Kenya in recent years. They filter international and Kenyan data through the model to recover a model-based decomposition of most variables into trends (or potential values) and temporary movements (or gaps), including for the international and domestic relative price of food. The filtration exercise helps recover the sequence of domestic and foreign macroeconomic shocks that account for business cycle dynamics in Kenya over the last few years, with a special emphasis on the various factors (international food prices, monetary policy) driving inflation. The authors find that while imported food price shocks have been an important source of inflation, both in 2008 and more recently, accommodating monetary policy has also played a role, most notably through its effect on the nominal exchange rate.

MONETARY POLICY AND SUNSPOT FLUCTUATIONS IN THE UNITED STATES AND THE EURO AREA

2012 ◽  
Vol 17 (1) ◽  
pp. 1-28 ◽  
Author(s):  
Yasuo Hirose
Keyword(s):  
United States ◽  
Monetary Policy ◽  
Euro Area ◽  
Open Economy ◽  
The United States ◽  
Dynamic Stochastic General Equilibrium ◽  
New Keynesian ◽  
Bayesian Techniques ◽  
Dynamic Stochastic ◽  
Substantial Degree

We estimate a two-country open economy version of the New Keynesian dynamic stochastic general equilibrium model for the United States and the Euro area, using Bayesian techniques that allow for both determinacy and indeterminacy of the equilibrium. Empirical analysis shows that the worldwide equilibrium is indeterminate due to a passive monetary policy in the Euro area, even if U.S. policy is aggressive enough. We demonstrate that the impulse responses under indeterminacy exhibit dynamics different from those under determinacy and that sunspot shocks affect the Euro economy to a substantial degree, whereas the transmission of sunspots to the United States is limited.

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