Some countries may face choice between targeting inflation independently and entering a monetary union that targets inflation. This paper shows that the choice of a country in favour of monetary union may be motivated by asymmetrical supply shocks. The demand shocks are neutralised under these...

In a two-period model with distortionay tax and public investment, we reexamine the interaction between monetary policy transparency and fiscal bias. We find that the optimal decisions of tax and public investment allow eliminating the effects of fiscal bias and hence neutralizing the impact of...

Cet article étudie la stabilité macroéconomique lorsque la Banque Centrale intègre dans sa règle du taux d'intérêt optimale les cours boursiers. Nous montrons que lorsque la Banque Centrale a une forte aversion pour l'inflation en attribuant un poids important à l'objectif de l'inflation...

The effects of quantitative easing policy, which looks like a “helicopter dropping” of money, are quite complex. Implemented following a major crisis induced by the deflation of bubbles on asset prices, this policy creates redistributive effects in favour of financial and banking...

This paper extends MURPHY's (1991) analysis of alternative lending arrangements. We incorporate the capital accumulation into the two sector model and departure from traditional model of this kind by making two assumptions. One of them is to postulate rigid wage and unemployment, and the another...

Using an aggregate dynamic macroeconomic model, we study the macroeconomic and financial stability under flexible inflation-targeting regime associated with intermediate monetary growth target. Central banks, using the inflation target as a communication and strong nominal anchoring device,...

This paper examines how the transparency in monetary policy decision can impact the likelihood of currency crisis in a simple open economy model with public debt. In the presence of opacity, it is found that if the debt is high, the government will devaluate and vice versa, and the...

This paper reexamines the Purchasing Power Parity (PPP) in an open economy macroeconomic model with Cournot competition in the international trade of a unique good. Foreign and domestic firms have a Cournot perception of foreign and domestic markets and make separate quantity decisions for each...

In this paper we examine the macroeconomic stability in a simple dynamic open economy model, in which monetary authorities adopt an flexible inflation-targeting regime in an environment with a liberalised capital account and flexible exchange rates. In this respect, inflation targeting is an...

It is set up in this paper a formulation which endogeneizes the choice of investment inputs in open economy context where a small country may depend on foreign technology. Then it is integrated into a macroeconomic model of small specialized country with Blanchard-Yaari type uncertain horizon...