Open AccessOptimal Monetary Policy in Small Open Economies: Producer Currency Pricing
Author(s) -
Mikhail Dmitriev,
Jonathan Hoddenbagh
Publication year - 2019
Publication title -
ssrn electronic journal
Language(s) - English
Resource type - Journals
ISSN - 1556-5068
DOI - 10.2139/ssrn.3464872
Subject(s) - monetary economics , currency , monetary policy , economics , small open economy , open economy , business , international economics , exchange rate
We establish the share of exports in production as a sufficient statistic for optimal noncooperative monetary policy. Under financial autarky, markups positively co-move with the export share. For complete markets, markups should be procyclical if the export share is procyclical. When central banks cooperate, markups are constant under complete markets, and countercyclical under financial autarky.
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