Optimal Monetary Policy in a ‘Sudden Stop’
نویسندگان
چکیده
During the Asian financial crises, interest rates were raised immediately, and then reduced sharply. We describe an environment in which this is the optimal monetary policy. ∗Northwestern University and Tilburg University. †Northwestern University, and NBER. ‡International Monetary Fund. §Braggion thanks the European Central Bank-Research Department for its hospitality. Christiano is grateful for the financial support of a National Science Foundation grant to the National Bureau of Economic Research. The authors are grateful for the advice and comments of Klaus Adam, Narayana Kocherlakota, Andrew Scott, Jaume Ventura and Michael Woodford. The results reported in this paper do not necessarily reflect the opinion of the International Monetary Fund.
منابع مشابه
Output Loss from Sudden Stop of FDI and the Role of Macroeconomic Policies
Generally, international flows of capital and foreign direct investment attraction are challengeable issues in the literature of economic growth and development in emerging market countries. However, the fluctuations in foreign direct investment, including sudden flood and stop, will affect emerging markets' output and macroeconomic variables. Using an econometric model with unbalanced panel da...
متن کاملFiscal and monetary policies and the cost of sudden stops
This article investigates the effects of macroeconomic policy (monetary and fiscal) on output growth during financial crises characterized by a “sudden stop” in net capital inflows in developing and emerging market economies. We investigate 83 sudden stop crises in 77 countries over 1982-2003 using a baseline empirical model to control for the various determinants of output losses during sudden...
متن کاملOptimal Cyclical Behavior of Monetary Policy of Iran: Using a DSGE Model
The countercyclical monetary policy is a policy that economists recommend to adopt in order to slow down the economic fluctuations. The aim of this study is to address the question that, in the presence of fiscal dominance and considering institutional quality (IQL), what the optimal monetary policy should be during the business cycles? To find the appropriate answer, first, in the framework of...
متن کاملMonetary Policy Challenges in Emerging Markets: Sudden Stop, Liability Dollarization, and Lender of Last Resort
متن کامل
Estimating the Index of Monetary Policy Efficiency in a Selected Country: Pakistan
The ultimate goal of monetary policy is to achieve price stability and favorable economic growth through policy tools. The purpose of this paper is to determine the optimal monetary policy rule and measure and evaluate the effectiveness of monetary policy in an elected economy -Pakistan- with optimal control method. In this way, using Dynamic Programming, monetary policy maker's loss function ...
متن کامل