Arbeitspapier

Distributional Effects of Monetary Policy in Emerging Market Economies

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.

Sprache
Englisch

Erschienen in
Series: IZA Discussion Papers ; No. 9272

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

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

Handle
Letzte Aktualisierung
10.03.2025, 11:42 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.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Prasad, Eswar
  • Zhang, Boyang
  • Institute for the Study of Labor (IZA)

Entstanden

  • 2015

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