Arbeitspapier
Money Supply Rules and Exchange Rate Dynamics
This paper examines the implications of monetary policy rules for exchange rate dynamics. I extend a standard New Open Economy Macroeconomics model with the introduction of a simple money supply rule, whereby central banks change their monetary policy if output diverges from potential output or if inflation diverges from the target inflation. A key result is that, in the case of permanent technology and monetary shocks, the nominal exchange rate does not follow a random walk; instead, the exchange rate undershoots its long-run value. An undershooting of the exchange rate derives from the active monetary policy that both countries conduct.
- Sprache
-
Englisch
- Erschienen in
-
Series: Discussion paper ; No. 62
- Klassifikation
-
Wirtschaft
- Thema
-
Monetary policy rules
open economy macroeconomics
exchange rate
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Tervala, Juha
- Ereignis
-
Veröffentlichung
- (wer)
-
Aboa Centre for Economics (ACE)
- (wo)
-
Turku
- (wann)
-
2010
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
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Objekttyp
- Arbeitspapier
Beteiligte
- Tervala, Juha
- Aboa Centre for Economics (ACE)
Entstanden
- 2010
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