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We investigate empirically the inflation dynamics in New Zealand, a small open economy and a pioneer in inflation targeting, under various open-economy Phillips curve specifications. Our forecasting exercise suggests that open-economy Phillips curves under standard measures of global slack do...
Persistent link: https://www.econbiz.de/10012957136
We investigate empirically the inflation dynamics in New Zealand, a small open economy and a pioneer in inflation targeting, under various open-economy Phillips curve specifications. Our forecasting exercise suggests that open-economy Phillips curves under standard measures of global slack do...
Persistent link: https://www.econbiz.de/10012960529
The global slack hypothesis is central to the discussion of the trade-offs that monetary policy faces in an increasingly more integrated world. The workhorse New Open Economy Macro (NOEM) model of Martínez-García and Wynne (2010), which fleshes out this hypothesis, shows how expected future...
Persistent link: https://www.econbiz.de/10012904444
This note summarizes the salient derivations of Martínez-García (2018). Specifically, it shows that the solution to a large class of linear rational expectations (LRE) models can be represented in finite-order VAR form. Martínez-García (2018) proposes a unified approach that uses a companion...
Persistent link: https://www.econbiz.de/10012908444
Kabukçuoğlu and Martínez-García (Forthcoming) model local inflation dynamics using global inflation and domestic slack motivated by a novel interpretation of the implications of the workhorse open-economy New Keynesian model. Then, Kabukçuoğlu and Martínez-García (Forthcoming) evaluate...
Persistent link: https://www.econbiz.de/10012943015
The analysis in this paper was presented to the Federal Open Market Committee as background for its discussion of the Federal Reserve's review of monetary policy strategy, tools, and communication practices. The Committee discussed issues related to the review at five consecutive meetings from...
Persistent link: https://www.econbiz.de/10012824115
We study a generalized version of Coleman (1990)'s time iteration method (GTI) for solving dynamic optimization problems. Our benchmark framework is an irreversible investment model with labor-leisure choice. The GTI algorithm is simple to implement and provides advantages in terms of speed...
Persistent link: https://www.econbiz.de/10012824971
We introduce the market resources method (MRM) for solving dynamic optimization problems. MRM extends Carroll's (2006) endogenous grid point method (EGM) for problems with more than one control variable using policy function iteration. The MRM algorithm is simple to implement and provides...
Persistent link: https://www.econbiz.de/10012968950
I develop a two-country New Keynesian model with capital accumulation and incomplete international asset markets that provides novel insights on the effect that imperfect international risk-sharing has on international business cycles and RER dynamics. I find that business cycles appear similar...
Persistent link: https://www.econbiz.de/10012970176
We evaluate the performance of inflation forecasts based on the open-economy Phillips curve by exploiting the spatial pattern of international propagation of inflation. We model these spatial linkages using global inflation and either domestic slack or oil price fluctuations, motivated by a...
Persistent link: https://www.econbiz.de/10012970177