Monetary policy in a dollarized economy where 12 balance sheets matter q 13 14
نویسندگان
چکیده
21 22 Abstract 23 24 Does the dollarization of liabilites and the resulting balance sheet vulnerability prevent 25 monetary policy from serving its conventional countercyclical role? We study this question 26 in a model of a small open economy in which domestic firms face an imperfect capital 27 w market, with risk premia depending on net worth as in Bernanke and Gertler Am. Econ. 28 Ž . x Rev. 79 1989 14. . In spite of the financial fragility channels present in the model, the 29 conventional wisdom still holds: under a floating exchange rate, countercyclical monetary 30 policy does help cushion the impact of foreign real shocks. q 2001 Published by Elsevier 31 Science B.V. 32 33 JEL classification: F41; E52; F32 34 5 6
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