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dc.contributor.authorSenay, Ozge
dc.contributor.authorSutherland, Alan
dc.identifier.citationSenay , O & Sutherland , A 2013 , ' The timing of asset trade and optimal policy in dynamic open economies ' , Macroeconomic Dynamics , vol. 17 , no. 8 , pp. 1543-1573 .
dc.identifier.otherPURE: 16039434
dc.identifier.otherPURE UUID: ee51c7cb-34c7-499f-8a4a-7a4e7119ff5b
dc.identifier.otherScopus: 84887901856
dc.identifier.otherORCID: /0000-0002-0175-3886/work/60426741
dc.identifier.otherORCID: /0000-0002-8310-968X/work/60426900
dc.description.abstractUsing a standard open economy DSGE model, it is shown that the timing of asset trade relative to policy decisions has a potentially important impact on the welfare evaluation of monetary policy at the individual country level. If asset trade in the initial period takes place before the announcement of policy, a national policymaker can choose a policy rule which reduces the work effort of households in the policymaker’s country in the knowledge that consumption is fully insured by optimally chosen international portfolio positions. But if asset trade takes place after the policy announcement, this insurance is absent and households in the policymaker’s country bear the full consumption consequences of the chosen policy rule. The welfare incentives faced by national policymakers are very different between the two cases. Numerical examples confirm that asset market timing has a significant impact on the optimal policy rule.
dc.relation.ispartofMacroeconomic Dynamicsen
dc.rightsThis is the author's version of this work. The published version copyright (c) Cambridge University Press 2013 is available from http://journals.cambridge.orgen
dc.subjectAsset tradeen
dc.subjectOptimal monetary policyen
dc.subjectMonetary policy in open economiesen
dc.subjectInternational financial marketsen
dc.subjectHB Economic Theoryen
dc.titleThe timing of asset trade and optimal policy in dynamic open economiesen
dc.typeJournal articleen
dc.contributor.sponsorEconomic & Social Research Councilen
dc.contributor.institutionUniversity of St Andrews. School of Economics and Financeen
dc.description.statusPeer revieweden

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