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Wednesday, July 29, 2020 | History

2 edition of Optimal commitment in an open economy found in the catalog.

Optimal commitment in an open economy

Sylvester C. W. Eijffinger

Optimal commitment in an open economy

credibility vs flexibility

by Sylvester C. W. Eijffinger

  • 284 Want to read
  • 6 Currently reading

Published by Bank of England in London .
Written in English

    Subjects:
  • Monetary policy -- Mathematical models.,
  • Banks and banking, Central.

  • Edition Notes

    StatementSylvester Eijffinger and Eric Schaling.
    SeriesWorking paper series / Bank of England -- no.41
    ContributionsSchaling, Eric, 1962-, Bank of England.
    The Physical Object
    Pagination48p. ;
    Number of Pages48
    ID Numbers
    Open LibraryOL20140622M

    We introduce limited commitment into a standard optimal fiscal policy model in small open economies. We consider the problem of a benevolent government that signs a risk-sharing contract with the.   The optimal degree of exchange-rate flexibility is an old theme in open-economy macroeconomics. The novel aspect of our paper is to re-set this question in a modern, expected utility maximizing framework, and to investigate the extent to which the answer depends on the manner in which prices are by:

      Chapter 1 is an Introductory chapter which explains our general approach to the subject of optimal monetary policy. This approach emphasizes the information problem that faces policy makers: the pervasiveness of uncertainty. The book also takes a long view of the subject, tracing the development of the literature back to the contributions of Brainard and Poole. This paper develops a welfare-based model of monetary policy in an open economy. We examine the optimal monetary policy under commitment, focusing on the nature of price adjustment in determining policy. We investigate the implications of these policies for exchange-rate flexibility. The traditionalFile Size: 96KB.

    Fiscal Policy in Debt Constrained Economies Mark Aguiar Princeton University Manuel Amadory Federal Reserve Bank of Minneapolis Octo Abstract We study optimal fiscal policy in a small open economy (SOE) with sovereign and private default risk and limited commitment to . Svensson: w The Zero Bound in an Open Economy: A Foolproof Way of Escaping from a Liquidity Trap: Eggertsson and Woodford: w Optimal Monetary Policy in a Liquidity Trap: Cúrdia and Woodford: w The Central-Bank Balance Sheet as an Instrument of Monetary Policy: Auerbach and Obstfeld: w The Case for Open-Market Purchases in a Liquidity Trap.


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Optimal commitment in an open economy by Sylvester C. W. Eijffinger Download PDF EPUB FB2

Get this from a library. Optimal commitment in an open economy: credibility vs flexibility. [Sylvester C W Eijffinger]. PROPOSITION With a positive natural rate of unemployment, in an open economy the optimal degree of central bank independence lies between zero and infinity (For ˜ u>0, 0.

The aim of this paper is to find the correct balance between credibility and flexibility, ie the optimal degree of central bank independence. The first part of the paper sets out an open economy model and identifies some macroeconomic factors that influence the optimal degree of independence.

Optimal commitment in an open economy: Credibility vs. flexibility () Pagina-navigatie: Main; Save publication. Save as MODS; Export to Mendeley; Save as EndNote; Export to RefWorks; Title: Optimal commitment in an open economy: Credibility vs. flexibility: Published in: Independent central banks and economic performance, - Cited by: 6.

Optimal Commitment in an Open Economy: Credibility vs. Flexibility Working papers set out research in progress by our staff, with the aim of encouraging comments and. Optimal Commitment in an Open Economy: Credibility vs Flexibility Sy lvester Eijffinger* an d Eric Schaling * * December CentER for Economic Research, Tilburg University, P.O.

BOl{ 90LE Tilburg, The Netherlands and College of Europe, Bruges, Belgium. Optimal Commitment in an Open Economy: Credibility vs. Flexibility. By Sylvester Eijffinger and Eric Schaling. Abstract. The theoretical argument for central bank independence is based on the idea that even if the government represents people's preferences over inflation and output it has an incentive to renege from prearranged plans to gain a Author: Sylvester Eijffinger and Eric Schaling.

COVID Resources. Reliable information about the coronavirus (COVID) is available from the World Health Organization (current situation, international travel).Numerous and frequently-updated resource results are available from this ’s WebJunction has pulled together information and resources to assist library staff as they consider how to handle coronavirus.

open-economy New Keynesian Phillips curve, relating current in⁄ation to expected in⁄ation and changes in marginal costs. In an open economy, the latter (marginal costs) is a function of output gaps plus two additional terms, one accounting for misalignments in international relative prices, the other.

the nature of policy games in open economies. Recently, many have studied optimal monetary policy in open economies using the microfounded, open-economy sticky-price models based on the so-called New Open Economy Macroeconomics (hereafter, NOEM) initiated by Obstfeld and Rogoff () and Svensson and van Wijnbergen ().

"Optimal Commitment in an Open Economy: Credibility vs. Flexibility," Bank of England working pap Bank of England. Eijffinger, S.C.W., "Optimal commitment in an open economy: Credibility vs.

flexibility," Other publications TiSEM f87dabb-bf7a-5, Tilburg University, School of Economics and Management. THE OPTIMAL DEGREE OF COMMITMENT across regimes.

Which target works best depends, of course, on the structure of the economy and the nature of the underlying disturbances. (Though we demonstrate that the interest rate is generally an unsatisfactory tool for precommitment.) In Section. Tilburg University Optimal commitment in an open economy Eijffinger, S.C.W.

Published in: Independent central banks and economic performance Publication date: Link to publication Citation for published version (APA): Eijffinger, S. Optimal commitment in an open economy: Credibility vs. flexibility. In S. A key insight from the open economy literature is that domestic price stability is in general not optimal for countries that exert some market power over their terms of trade.

Under commitment, a national benevolent monetary policymaker improves upon the allocation. Topics: 05D - Economics, economic theory, Optimal commitment in an open economy [ Central bank independence].

7 Monetary Policy and the Open Economy 8 Main Lessons and Some Extensions differences between the optimal policy with and without commitment. Chapter 6 course. In addition, this book includes a chapter on open economy extensions of the basic New Keynesian model, a topic not covered in Woodford’s book.

policy prescriptions and equilibrium outcomes for a small open economy (SOE) at the ZLB di ers from that for a closed economy, which is the usual benchmark in the literature.

We study open economy dimensions of optimal monetary and scal policy at the ZLB, both with and without commitment, in a standard SOE model. to the inclusion of a worldwide stochastic technology shock. This means that the open-economy aspects are of particular importance in our setting.

By optimal monetary policy we mean policy that minimizes an intertemporal loss function under commitment. The intertemporal loss function is a discounted sum of expected future period losses. We introduce limited commitment into a standard optimal fiscal policy model in small open economies.

We consider the problem of a benevolent government that signs a risk-sharing contract with the rest of the world, and that has to choose optimally distortionary taxes on labor income, domestic debt and international by: 3.

Keynesian Open Economy literature, one period ahead price-setting by all firms, adds nothing to the results. Obviously, things change if we relax the commitment assumption or introduce staggered price-setting, but this is not the focus of the paper. 3An exception is Bachetta and van Wincoop ().

The focus of that paper is the optimal. Under commitment, the same redistributive motives to in⁄ate exist, but they are counteracted by an opposing force: the central bank internalizes how investors™expectations of future in⁄ation a⁄ect their pricing of the long-term nominal bonds from the time the optimal commitment plan is formulated (™time zero™) onwards.A complete introduction to economics and the economy taught in undergraduate economics and masters courses in public policy.

CORE’s approach to teaching economics is student-centred and motivated by real-world problems and real-world data.In an open economy where the real exchange rate exercises a direct effect on inflation in the Phillips curve, the delegation of a CPI or domestic price level target to a central banker who sets policy with discretion cannot replicate the behavior of the target variables under policy from a timeless by: 1.