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Canada's Pioneering Experience with a Flexible Exchange Rate in the 1950s : (Hard) Lessons Learned for Monetary Policy in a Small Open Economy

Bordo, Michael D. - 2007

This paper revisits Canada's pioneering experience with floating exchange rate over the period 1950-1962. It examines … whether the floating rate was the best option for Canada in the 1950s by developing and estimating a New Keynesian small open … that monetary policy was more volatile in the post-1957 period and Canada's macroeconomic performance suffered as a result …

Persistent link: https://www.econbiz.de/10012465041

A Small Open Economy in Depression : Lessons from Canada in the 1930s

Betts, Caroline M. - 1993

open economy model for Canada that decomposes output fluctuations into sources identifiable with world and country …-specific disturbances. We find that the onset, depth and duration of output collapse in both Canada and the U.S. are primarily attributable …

Persistent link: https://www.econbiz.de/10012474427

External Constraints on Monetary Policy and the Financial Accelerator

Gertler, Mark - 2003

We develop a small open economy macroeconomic model where financial conditions influence aggregate behavior. We use this model to explore the connection between the exchange rate regime and financial distress. We show that fixed exchange rates exacerbate financial crises by tieing the hands of...

Persistent link: https://www.econbiz.de/10012468566

Monetary Rules for Small, Open, Emerging Economies

Laxton, Douglas - 2003

This paper develops a variant of the IMF's Global Economic Model (GEM) suitable to analyze macroeconomic dynamics in open economies, and uses it to assess the effectiveness of Taylor rules and Inflation-Forecast-Based (IFB) rules in stabilizing variability in output and inflation. Our findings...

Persistent link: https://www.econbiz.de/10012469132

Financial Frictions and Unconventional Monetary Policy in Emerging Economies

Chang, Roberto - 2016

We analyze conventional and unconventional monetary policies in a dynamic small open-economy model with financial frictions. In the model, financial intermediaries or banks borrow from the world market and lend to domestic households. Banks can borrow abroad up to a multiple of their equity; in...

Persistent link: https://www.econbiz.de/10012456718

Short-Term Pain for Long-Term Gain : Market Deregulation and Monetary Policy in Small Open Economies

Cacciatore, Matteo - 2015

This paper explores the effects of labor and product market reforms in a New Keynesian, small open economy model with labor market frictions and endogenous producer entry. We show that it takes time for reforms to pay off, typically at least a couple of years. This is partly because the benefits...

Persistent link: https://www.econbiz.de/10012456887

Rose, Andrew K. - 2013

In contrast to earlier recessions, the monetary regimes of many small economies have not changed in the aftermath of the global financial crisis. This is due in part to the fact that many small economies continue to use hard exchange rate fixes, a reasonably durable regime. However, most of the...

Persistent link: https://www.econbiz.de/10012459030

World Food Prices and Monetary Policy

Catão, Luis - 2010

In recent years, large fluctuations in world food prices have renewed interest in the question of how monetary policy in small open economies should react to imported price shocks. We address this issue in an open economy setting similar to previous ones except that food plays a distinctive role...

Persistent link: https://www.econbiz.de/10012462094

Monetary Policy Trade-Offs in an Estimated Open-Economy DSGE Model

Adolfson, Malin - 2008

This paper studies the transmission of shocks and the trade-offs between stabilizing CPI inflation and alternative measures of the output gap in Ramses, the Riksbank's empirical dynamic stochastic general equilibrium (DSGE) model of a small open economy. The main results are, first, that the...

Persistent link: https://www.econbiz.de/10012464137

Interest Rates and the Exchange Rate : A Non-Monotonic Tale

Hnatkovska, Viktoria - 2008

What is the relationship between interest rates and the exchange rate? The empirical literature in this area has been inconclusive. We use an optimizing model of a small open economy to rationalize the mixed empirical findings. The model has three key margins. First, higher domestic interest...

Persistent link: https://www.econbiz.de/10012464722