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Svensson, Lars E. O. - 2000

The paper extends previous analysis of closed-economy inflation targeting to a small open economy with forward … for monetary policy. The paper compares targeting of CPI and domestic inflation, strict and flexible inflation targeting …, and inflation-targeting reaction functions and the Taylor rule. The optimal monetary policy response to several different …

Persistent link: https://www.econbiz.de/10012471032

Hedging and Financial Fragility in Fixed Exchange Rate Regimes

Burnside, Craig - 1999

Currency crises that coincide with banking crises tend to share four elements. First, governments provide guarantees to domestic and foreign bank creditors. Second, banks do not hedge their exchange rate risk. Third, there is a lending boom before the crises. Finally, when the currency/banking...

Persistent link: https://www.econbiz.de/10012471651

The Business Cycles of Balance-of-Payment Crises : A Revision of Mundellan Framework

Mendoza, Enrique G. - 1999

In his seminal 1960 article Robert Mundell proposed a model of balance-of-payments crises in which confidence in the continuation of a currency peg depended on the observed holdings of central bank foreign reserves. We examine the implications of a reformulation of this view from the perspective...

Persistent link: https://www.econbiz.de/10012471756

Devaluation Risk and the Syndrome of Exchange-Rate-Based Stabilizations

Mendoza, Enrique G. - 1999

This paper shows that the risk of devaluation can be an important factor accounting for the stylized facts of exchange-rate-based stabilizations. This conclusion follows from studying the quantitative implications of a two-sector equilibrium business cycle model of a small open economy...

Persistent link: https://www.econbiz.de/10012471786

Optimal Monetary Growth with Accomodating Fiscal Policy in a Small Open Economy

Turnovsky, Stephen J. - 1986

between the income tax rate and the inflation tax rate. The framework is suited for analyzing optimal macroeconomic policy in …

Persistent link: https://www.econbiz.de/10012476986

Small Countries in Monetary Unions : A Two-Tier Model

de Macedo, Jorge Braga - 1985

In a previous analysis of the West African Monetary Union, Macedo(1985a), size is taken to be a major structural characteristic of a country in the sense that large countries are not affected by disturbances originating in small countries but small countries are affected by large countries'...

Persistent link: https://www.econbiz.de/10012477446

Wage Indexation and Exchange Market Intervention in a Small Open Economy

Turnovsky, Stephen J. - 1983

The analysis of this paper stresses the interdependence between wage indexation on the one hand, and exchange market intervention on the other,as tools of'macroeconomic stabilization policy in a small open economy subject to stochastic disturbances. It is shown how the choice of eitherpolicy...

Persistent link: https://www.econbiz.de/10012477930

A Tractable Model of Precautionary Reserves, Net Foreign Assets, or Sovereign Wealth Funds

Carroll, Christopher D. - 2009

We model the motives for residents of a country to hold foreign assets, including the precautionary motive that has been omitted from much previous literature as intractable. Our model captures many of the principal insights from the existing specialized literature on the precautionary motive,...

Persistent link: https://www.econbiz.de/10012463421

Can Structural Small Open Economy Models Account for the Influence of Foreign Disturbances?

Justiniano, Alejandro - 2008

This paper demonstrates that an estimated, structural, small open economy model of the Canadian economy cannot account for the substantial influence of foreign-sourced disturbances identified in numerous reduced-form studies. The benchmark model assumes uncorrelated shocks across countries and...

Persistent link: https://www.econbiz.de/10012464100

Trade, Diffusion and the Gains from Openness

Rodriguez-Clare, Andres - 2007

Building on Eaton and Kortum's (2002) model of Ricardian trade, Alvarez and Lucas (2005) calculate that a small country representing 1% of the world's GDP experiences a gain of 41% as it goes from autarky to frictionless trade with the rest of the world. But the gains from openness, which...

Persistent link: https://www.econbiz.de/10012464979

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