Monetary Policy Rules and the Exchange Rate

Benigno, Gianluca and Benigno, Pierpaolo (2000) Monetary Policy Rules and the Exchange Rate. [Working Paper]. Social Science Electronic Pub. p. 61. SSRN Working Paper Series

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A positive and normative evaluation of alternative monetary policy regimes is addressed in a simple two-country general equilibrium model. The behavior of the exchange rate, as well as of the other macroeconomic variables, depends crucially on the monetary regime chosen, though not necessarily on monetary shocks. The centralized welfare criterion presents a trade-off between stabilizing the economy around the flexible-price allocation and reducing the volatility of the nominal interest rates. Some form of control of the exchange rate is desirable.

Item Type: Report / Paper (Working Paper)
Research documents and activity classification: Working Papers > Non-Refereed Working Papers / of national relevance only
Divisions: Department of Business and Management
Additional Information: This paper has been published in "CEPR discussion paper" (no. 2807), Centre for Economic Policy Research, London (2001).
MIUR Scientific Area: Area 13 - Economics and Statistics > SECS-P/01 Political Economy
Deposited by: Maria Teresa Nisticò
Date Deposited: 12 Nov 2010 15:21
Last Modified: 22 Apr 2015 00:13


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