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| Author: | Senay, O. Sutherland, A. |
| Title: | Foreign money shocks and the welfare performance of alternative monetary policy regimes |
| Journal: | Scandinavian Journal of Economics
2007 : VOL. 109:2, p. 245-266 |
| Index terms: | monetary policy welfare expenditure exchange rates models |
| Language: | eng |
| Abstract: | Using a two-country sticky-price model, this study explores welfare (hereafter as: w-f.) properties of monetary policy regimes for a country subject to foreign money shocks. Among others, it is found that money targeting is welfare superiour to a fixed exchange rate (as: e-rate) when the expenditure switching effect (here as: e-sw-e.) of e-rate changes is relatively weak, but a fixed rate is superiour when the e-sw-e. is strong. However, price targeting is superiour to both these regimes for all values of the e-sw-e. |
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