Alternative targets in optimal monetary policy rules in an open economy

Alternative targets in optimal monetary policy rules in an open economy

This report examines the optimal monetary policy rules in a two-country DSGE model with real and nominal rigidities. The model is solved by simulation in discrete time and the optimal rule is selected as the one giving highest utility. We find that (1) targeting wage inflation always delivers welfar...

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Main Authors: Chen, Qin, Dai, Chenyuan, Xia, Bingxing
Other Authors: Chia Wai Mun
Format: Final Year Project
Language:English
Published: 2010
Subjects:
DRNTU::Social sciences::Economic theory::International trade
Online Access:http://hdl.handle.net/10356/39439
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Institution: Nanyang Technological University
Language: English
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spelling sg-ntu-dr.10356-394392019-12-10T11:48:23Z Alternative targets in optimal monetary policy rules in an open economy Chen, Qin Dai, Chenyuan Xia, Bingxing Chia Wai Mun School of Humanities and Social Sciences DRNTU::Social sciences::Economic theory::International trade This report examines the optimal monetary policy rules in a two-country DSGE model with real and nominal rigidities. The model is solved by simulation in discrete time and the optimal rule is selected as the one giving highest utility. We find that (1) targeting wage inflation always delivers welfare improvements; (2) targeting exchange rate brings non-decreasing welfare; (3) with interest rate smoothing, monetary authority should give equal weight to inflation targeting and wage inflation targeting. Also, the two-country DSGE model shows a good forecast power after technological shocks and transaction cost shocks. Bachelor of Arts 2010-05-24T06:40:42Z 2010-05-24T06:40:42Z 2010 2010 Final Year Project (FYP) http://hdl.handle.net/10356/39439 en Nanyang Technological University 107 p. application/pdf
institution Nanyang Technological University
building NTU Library
country Singapore
collection DR-NTU
language English
topic DRNTU::Social sciences::Economic theory::International trade
spellingShingle DRNTU::Social sciences::Economic theory::International trade
Chen, Qin
Dai, Chenyuan
Xia, Bingxing
Alternative targets in optimal monetary policy rules in an open economy
description This report examines the optimal monetary policy rules in a two-country DSGE model with real and nominal rigidities. The model is solved by simulation in discrete time and the optimal rule is selected as the one giving highest utility. We find that (1) targeting wage inflation always delivers welfare improvements; (2) targeting exchange rate brings non-decreasing welfare; (3) with interest rate smoothing, monetary authority should give equal weight to inflation targeting and wage inflation targeting. Also, the two-country DSGE model shows a good forecast power after technological shocks and transaction cost shocks.
author2 Chia Wai Mun
author_facet Chia Wai Mun
Chen, Qin
Dai, Chenyuan
Xia, Bingxing
format Final Year Project
author Chen, Qin
Dai, Chenyuan
Xia, Bingxing
author_sort Chen, Qin
title Alternative targets in optimal monetary policy rules in an open economy
title_short Alternative targets in optimal monetary policy rules in an open economy
title_full Alternative targets in optimal monetary policy rules in an open economy
title_fullStr Alternative targets in optimal monetary policy rules in an open economy
title_full_unstemmed Alternative targets in optimal monetary policy rules in an open economy
title_sort alternative targets in optimal monetary policy rules in an open economy
publishDate 2010
url http://hdl.handle.net/10356/39439
_version_ 1681038201019432960

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