In this paper, we consider a small open economy under the New Keynesian model with unemployment of Gali (2011a, b) to … unemployment, the optimal policy is to minimize variance of domestic price inflation, wage inflation, and the output gap when both … domestic price and wage are sticky. Second, stabilizing unemployment rate is important in reducing the welfare loss incurred by …

In this paper, we consider a small open economy under the New Keynesian model with unemployment of Galí (2011a, b) to … unemployment, the optimal policy is to minimize variance of domestic price inflation, wage inflation, and the output gap when both … domestic price and wage are sticky. Second, stabilizing unemployment rate is important in reducing the welfare loss incurred by …

In this paper, we incorporate key ingredients of a small open economy into the New Keynesian model with unemployment of …, wage inflation, and the output gap if both domestic price and wage are sticky. Second, stabilizing unemployment rate is … unemployment rate as an another argument into the Taylor-rule type interest rate rule will be welfare-enhancing. Last, controlling …