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Optimal monetary policy, exchange rate misalignments and incomplete financial markets
Item metadata
dc.contributor.author | Senay, Ozge | |
dc.contributor.author | Sutherland, Alan James | |
dc.date.accessioned | 2020-06-26T23:35:33Z | |
dc.date.available | 2020-06-26T23:35:33Z | |
dc.date.issued | 2019-03 | |
dc.identifier | 256866841 | |
dc.identifier | 5971f504-f06c-4e80-ba79-f5123fdcce99 | |
dc.identifier | 85061628049 | |
dc.identifier | 000463687400013 | |
dc.identifier.citation | Senay , O & Sutherland , A J 2019 , ' Optimal monetary policy, exchange rate misalignments and incomplete financial markets ' , Journal of International Economics , vol. 117 , pp. 196-208 . https://doi.org/10.1016/j.jinteco.2018.12.001 | en |
dc.identifier.issn | 0022-1996 | |
dc.identifier.other | ORCID: /0000-0002-0175-3886/work/60426737 | |
dc.identifier.other | ORCID: /0000-0002-8310-968X/work/60426899 | |
dc.identifier.uri | https://hdl.handle.net/10023/20166 | |
dc.description | This research is supported by ESRC Award Number ES/I024174/1. | en |
dc.description.abstract | Recent literature shows that, when international financial trade is restricted to autarky or a single bond, there are internal and external welfare trade-offs that imply optimal monetary policy, in principle, deviates from inflation targeting in order to offset real exchange rate misalignments. This paper develops a more realistic model of incomplete markets, where there is international trade in multiple assets. The analysis shows that the presence of multiple assets creates a potentially powerful interaction between monetary policy and household portfolio allocation. This interaction is, by definition, not present when there is financial autarky or a single tradeable bond and this paper shows that the interaction with portfolio allocation can imply that optimal monetary policy generates a quantitatively much more significant stabilisation of the real exchange rate gap than implied by simpler models of financial market incompleteness. | |
dc.format.extent | 13 | |
dc.format.extent | 314145 | |
dc.language.iso | eng | |
dc.relation.ispartof | Journal of International Economics | en |
dc.subject | Optimal monetary policy | en |
dc.subject | Financial market structure | en |
dc.subject | Country Portfolios | en |
dc.subject | HB Economic Theory | en |
dc.subject | T-NDAS | en |
dc.subject | BDC | en |
dc.subject | R2C | en |
dc.subject.lcc | HB | en |
dc.title | Optimal monetary policy, exchange rate misalignments and incomplete financial markets | en |
dc.type | Journal article | en |
dc.contributor.sponsor | Economic & Social Research Council | en |
dc.contributor.institution | University of St Andrews. School of Economics and Finance | en |
dc.identifier.doi | https://doi.org/10.1016/j.jinteco.2018.12.001 | |
dc.description.status | Peer reviewed | en |
dc.date.embargoedUntil | 2020-06-27 | |
dc.identifier.grantnumber | ES/I024174/1 | en |
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