Economic theory, 2007-05, Vol.31 (2), p.271-291
2007
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Details
- Autor(en) / Beteiligte
- Titel
- Inflation in open economies with complete markets
- Ist Teil von
- Economic theory, 2007-05, Vol.31 (2), p.271-291
- Ort / Verlag
- Heidelberg: Springer
- Erscheinungsjahr
- 2007
- Quelle
- EBSCOhost Business Source Ultimate
- Beschreibungen/Notizen
- This paper uses an overlapping generations model to analyze monetary policy in a two-country model with asymmetric shocks. Agents insure against risk through the exchange of a complete set of real securities. Each central bank is able to commit to the contingent monetary policy rule that maximizes domestic welfare. In an attempt to improve their country's terms of trade of securities, central banks choose to commit to costly inflation in favorable states of nature. In equilibrium the effects on the terms of trade wash out, leaving both countries worse off. Countries facing asymmetric shocks may therefore gain from monetary cooperation.
- Sprache
- Englisch
- Identifikatoren
- ISSN: 0938-2259eISSN: 1432-0479DOI: 10.1007/s00199-006-0091-9Titel-ID: cdi_proquest_miscellaneous_36709997
- Format
- –
- Schlagworte
- Central banks, Consumption, Cooperation, Currency, Economic models, Endowment, Endowments, Equilibrium, Game theory, Generations, Inflation, Inflation rates, Monetary economics, Monetary models, Monetary policy, Monetary theory, Monetary unions, Nash equilibrium, Open economies, Overlapping-generations model, Relative prices, Risk sharing, Security prices, State of nature, Studies, Terms of trade