scholarly journals Forward Guidance in an Advanced Small Open Economy in the Effective Lower Bound

2021 ◽  
Author(s):  
André Marine Charlotte ◽  
Traficante Guido
Keyword(s):  
Lower Bound ◽  
Open Economy ◽  
Small Open Economy ◽  
Forward Guidance

Estudiamos la guía futura (con duración conocida e incierta) en un modelo Nuevo-Keynesiano para una economía avanzada pequeña y abierta, mostrando que la respuesta de la economía a esta política depende, de manera cuantitativa y cualitativa, de algunas características estructurales mediante calibraciones para Suecia y España. En particular, anunciar una política expansiva futura está relacionado positivamente con el traspaso del tipo de cambio a la inflación y es mayor que en una economía cerrada, debido a una mejor disyuntiva entre producto e inflación y al canal del tipo de cambio. Además, se demuestra que múltiples equilibrios pueden ocurrir y que el tipo de cambio real es una variable crucial para obtener tal resultado. En particular, la respuesta del producto y la inflación se amplifica cuando la oferta agregada está relacionada negativamente al tipo de cambio real. Estos resultados no necesariamente se podrían extrapolar a economías emergentes.

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.

The long-run stability of a small, open economy under crawling peg regime

2002 ◽  
Vol 52 (1) ◽  
pp. 57-78
Author(s):  
S. Çiftçioğlu
Keyword(s):  
Exchange Rate ◽  
Open Economy ◽  
Risk Premium ◽  
Small Open Economy ◽  
Exchange Rate Policy ◽  
Price Stability ◽  
Output Stability ◽  
Long Run ◽  
The Exchange Rate ◽  
The Impact

The paper analyses the long-run (steady-state) output and price stability of a small, open economy which adopts a “crawling-peg” type of exchange-rate regime in the presence of various kinds of random shocks. Analytical and simulation results suggest that with the exception of money demand shocks, an exchange rate policy which involves a relatively higher rate of indexation of the exchange rate to price level is likely to lead to the worsening of price stability for all types of shocks. On the other hand, the impact of adopting such a policy on output stability depends on the type of the shock; for policy shocks to the exchange rate and shocks to output demand, output stability is worsened whereas for the shocks to risk premium of domestic assets, supply price of domestic output and the wage rate, better output stability is achieved in the long run.

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