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This paper shows that properly designed interest rate rules can be consistent withmaintaining exchange rate stability. It sheds light on the relation between interest rate rules,exchange rate regimes, and determinacy of the rational expectation equilibrium in a modernmacroeconomic framework.[...]
Persistent link: https://www.econbiz.de/10009138473
This paper addresses the consumption–real exchange rate anomaly.International real business cycle models based on complete financialmarkets predict a unitary correlation between the realexchange rate and the ratio of home to foreign consumptionwhen subjected to supply-side shocks. In the data,...
Persistent link: https://www.econbiz.de/10009138476
Persistent link: https://www.econbiz.de/10012501063
Persistent link: https://www.econbiz.de/10012424947
[...]This article explores the inflation puzzle andinvestigates whether compensation has acted as either atemporary restraint on inflation or as the underlying sourceof a new inflation regime.2 After reviewing the recent behavior of inflation, we specify and estimate a traditionalprice-inflation...
Persistent link: https://www.econbiz.de/10005870223
This paper considers the determination of aggregate price level under dispersed information.A Central Bank sets policy …. Information revealed to theagents and the bank is determined endogenously. It is shown that the aggregate state ofthe economy is … representative agent has perfect informationwhile the Bank has partial information. The Bank’s information set affects fluctuations …
Persistent link: https://www.econbiz.de/10005870374