haku: @indexterm open economy / yhteensä: 204
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| Tekijä: | Andersen, T. M. Risager, O. |
| Otsikko: | The role of credibility for the effects of a change in the exchange rate policy |
| Lehti: | Oxford Economic Papers
1991 : JAN, VOL. 43:1, p. 85-98 |
| Asiasana: | EXCHANGE RATES OPEN ECONOMY FINANCIAL MODELS FINANCIAL POLICY INFLATION |
| Kieli: | eng |
| Tiivistelmä: | A short-run small-open-economy model is extended with a monopoly union and a financial sector. In the first section, the economy is described. Then the game between the government and the private sector is explained. Later the real and monetary effects of disinflation is analyzed, and finally the modifications and extensions of the model discussed. It is shown that there exists an equilibrium where a disinflationary policy is bound to lead to a loss in output in the short term. The adjustment of interest rates is also interpreted. It is found that both the short and the long nominal interest rate initially decline. The decline in the long interest rate is less than the fall in the short interest rate due to the risk that the government might devalue. |
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