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| Tekijä: | Sutherland, A. |
| Otsikko: | Cost-push shocks and monetary policy in open economies |
| Lehti: | Oxford Economic Papers
2005 : JAN, VOL. 57:1, p. 1-33 |
| Asiasana: | Monetary policy Money demand Labour supply Costs Models |
| Vapaa asiasana: | Targeting |
| Kieli: | eng |
| Tiivistelmä: | This paper analyses the implications of cost-push shocks (henceforth as: c-p-shs.) for the optimal choice of monetary policy target in a 2-country sticky-price model. In addition to c-p-shs., each country is subject to labour-supply and money-demand shocks. It is shown that the fully optimal coordinated policy can be supported by independent national monetary authorities following a policy of flexible inflation targeting (here as: t-ing). A number of simple (but non-optimal) t-ing. rules are compared. Strict producer-price t-ing. is found to be the best simple rule when the variance of c-p-shs. is small. Strict consumer-price t-ing. is best for intermediate levels of the variance of c-p-shs. And nominal-income t-ing. is best when the variance of c-p-shs. is high. In general, money-supply t-ing. and fixed nominal exchange rates are found to yield less welfare than the other regimes. |
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