Distributional Effects of Monetary Policy in Emerging Market Economies

Arbeitspapier

We develop a two-sector, heterogeneous-agent model with incomplete financial markets to study the distributional effects and aggregate welfare implications of alternative monetary policy rules in emerging market economies. Relative to inflation targeting, exchange rate management benefits households in the tradable goods sector but in the long run these households are worse off due to higher consumption volatility. A fixed exchange rate reduces the welfare of these households and aggregate welfare when the economy is hit by positive shocks to nontradable goods productivity or foreign interest rates. Fiscal policy can more efficiently achieve similar short-run distributional objectives as exchange rate management.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: IZA Discussion Papers ; No. 9272

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Aggregate Factor Income Distribution ; Monetary Policy ; Central Banks and Their Policies ; Open Economy Macroeconomics
• Thema: monetary policy rules ; exchange rate management ; interest rate smoothing ; distributional effects ; emerging markets ; financial frictions ; inflation targeting

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Prasad, Eswar ; Zhang, Boyang
• Ereignis: Veröffentlichung
• (wer): Institute for the Study of Labor (IZA)
• (wo): Bonn
• (wann): 2015

Weitere Informationen

• Handle: http://hdl.handle.net/10419/114154
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ