haku: @indexterm open economy / yhteensä: 204
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| Tekijä: | Turnovsky, S. J. Grinols, E. |
| Otsikko: | Optimal government finance policyand exchange rate management in a stochastically growing open economy |
| Lehti: | Journal of International Money and Finance
1996 : OCT, VOL. 15:5, p. 687-716 |
| Asiasana: | MONETARY POLICY EXCHANGE RATES OPEN ECONOMY |
| Kieli: | eng |
| Tiivistelmä: | Optimal monetary policy is analyzed in a stochastic small open economy, consisting of risk averse representative agents. The analysis shows how optimal monetary policy should be directed toward an optimal interest rate target. This target, which maximizes the intertemporal utility of the representative agent, is determined by balancing off the marginal gains of a higher interest rate on increased growth and the future consumption it generates, against the marginal losses stemming from a reduction in the holdings of real money balances. The paper shows how an appropriately set monetary growth rate eliminates the need for continuous intervention in the exchange market. |
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