Financial globalization and monetary policy /

Recent data show substantial increases in the size of gross external asset and liability positions. The implications of these developments for optimal conduct of monetary policy are analyzed in a standard open economy model which is augmented to allow for endogenous portfolio choice. The model shows...

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Bibliographic Details
Main Author: Devereux, Michael B.
Other Authors: Sutherland, Alan 1962-
Format: Book
Language:English
Published: Frankfurt am Main : Deutsche Bundesbank, 2008
Series:Discussion paper (Deutsche Bundesbank). Series 1: economic studies no. 20/2008
Subjects:
Online Access:http://www.bundesbank.de/Redaktion/EN/Downloads/Publications/Discussion_Paper_1/2008/2008_11_04_dkp_20.pdf?__blob=publicationFile
Description
Summary:Recent data show substantial increases in the size of gross external asset and liability positions. The implications of these developments for optimal conduct of monetary policy are analyzed in a standard open economy model which is augmented to allow for endogenous portfolio choice. The model shows that monetary policy takes on new importance due to its impact on nominal asset returns. Nevertheless, the case for price stability as an optimal monetary rule remains. In fact, it is reinforced. Even without nominal price rigidities, price stability is optimal because it enhances the risk sharing properties of nominal bonds.
Physical Description:39 p.
Bibliography:Bibliografía: p. 22-28.
ISBN:9783865585450