Smets, Frank and Wouters, Raf (2002) Openness, imperfect exchange rate pass-through and monetary policy. NBB Working Paper Nr. 19. [Working Paper]
| PDF Download (318Kb) | Preview |
Abstract
This paper analyses the implications of imperfect exchange rate passthrough for optimal monetary policy in a linearised open-economy dynamic general equilibrium model calibrated to euro area data. Imperfect exchange rate pass through is modelled by assuming sticky import price behaviour. The degree of domestic and import price stickiness is estimated by reproducing the empirical identified impulse response of a monetary policy and exchange rate shock conditional on the response of output, net trade and the exchange rate. It is shown that a central bank that wants to minimise the resource costs of staggered price setting will aim at minimising a weighted average of domestic and import price inflation.
Export/Citation: | EndNote | BibTeX | Dublin Core | ASCII (Chicago style) | HTML Citation | OpenURL |
Social Networking: |
Item Type: | Working Paper |
---|---|
Uncontrolled Keywords: | Open economies; imperfect exchange rate pass-through. |
Subjects for non-EU documents: | EU policies and themes > Policies & related activities > economic and financial affairs > monetary policy EU policies and themes > Policies & related activities > economic and financial affairs > EMU/EMS/euro |
Subjects for EU documents: | UNSPECIFIED |
EU Series and Periodicals: | UNSPECIFIED |
EU Annual Reports: | UNSPECIFIED |
Series: | Series > National Bank of Belgium (Brussels) > Working Papers |
Depositing User: | Phil Wilkin |
Official EU Document: | No |
Language: | English |
Date Deposited: | 25 Jun 2003 |
Page Range: | p. 57 |
Last Modified: | 15 Feb 2011 17:16 |
URI: | http://aei-dev.library.pitt.edu/id/eprint/658 |
Actions (login required)
View Item |