Viable Solutions to an Open Economy Monetary Policy Problem
نویسندگان
چکیده
In Krawczyk and Kim (Macroeconomics, 2009), we studied the problem of setting monetary policy in a closed economy using viability theory. Policies derived from the application of viability theory are ‘good enough’, rather than ‘optimal’. In this paper, we extend the analysis to a small open-economy model where the exchange rate becomes an additional channel for the transmission of monetary policy. We compare viability kernels obtained for each economy and analyse the robustness of the adjustment policies to shock and model uncertainty.
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