This paper develops a dynamic stochastic general equilibrium(DSGE) model for a small open economy (SOE) that can be calibrated to simulate the macro dynamics of a semi-industrialized developing country like Argentina. We consider a multilateral non-commodity trade environment, with the U.S.A....

This paper develops a dynamic stochastic general equilibrium (DSGE) model for a small open economy (SOE) that can be calibrated to simulate the macro dynamics of a semi-industrialized developing country like Argentina. We consider a multilateral non-commodity trade environment, with the U.S.A....

The central bank in an open developing economy often balances the national foreign exchange market by selling liquid assets (typically domestic sovereign securities) to commercial banks and other institutional investors that would otherwise be motivated to invest in foreign financial assets....

This paper evaluates under which conditions different Taylor-type rules lead to determinacy and expectational stability (E-stability) of rational expectations equilibrium in a simple "New Keynesian" small open economy model, developed by Gali and Monacelli (2005). In particular, we extend the...

The UK has been a net debtor over the past two decades and the sterling exchange rates are sensitive to any chaos that might occur in the Financial market. This paper examines the importance of the inter-national financial imperfections in the sterling exchange rate dynamics. We build a small...

This paper investigates exchange rate dynamics in open economies by incorporating bounded rationality. We develop a small open-economy New Keynesian model with an incomplete asset market, wherein decision-makers possess limited foresight and can plan for only a finite distance into the future....

We evaluate the expectational stability (E-stability) of rational expectations equilibrium in a simple "New Keynesian" small open economy model. In particular, we extend Bullard and Mitra (JME, 2002) results of E-stability in closed economy to an open economy framework by evaluating Taylor-type...

We examine the economic consequences of an interest-bearing design of the Central-Bank Digital Currency (CBDC), and extend the discussion to an open-economy context with trade and capital flows. We use a dynamic stochastic general equilibrium (DSGE) model to simulate a baseline scenario with...

This paper discusses the role of sterilized foreign exchange (FX) interventions as a monetary policy instrument for emerging market economies in response to external shocks. We develop a model for a commodity-exporting small open economy in which FX intervention is considered as a balance sheet...

In this paper we provide new insights on the dynamics between monetary policy shocks and real exchange rates in small open economies using a time-varying structural vector autoregression model with stochastic volatility. Identification is achieved using a combination of short-run and long-run...