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Financial Market Integration, Costs of Adjusting Hours Worked and Monetary Policy
Author(s) -
Çenesiz M. Alper,
Pierdzioch Christian
Publication year - 2010
Publication title -
economic notes
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.274
H-Index - 19
eISSN - 1468-0300
pISSN - 0391-5026
DOI - 10.1111/j.1468-0300.2009.00219.x
Subject(s) - monetary policy , economics , financial integration , financial market , monetary economics , finance
Based on a dynamic stochastic general equilibrium model featuring a labour‐market friction in the form of costs of adjusting hours, we analyse how financial market integration affects the propagation of monetary policy in an open economy. The main result of our analysis is that costs of adjusting hours worked substantially dampen the increase in the effect of monetary policy on output and hours worked brought about by financial market integration.