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Monetary Policy, Determinacy, and Learnability in a Two‐Block World Economy
Author(s) -
BULLARD JAMES,
SCHALING ERIC
Publication year - 2009
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/j.1538-4616.2009.00268.x
Subject(s) - determinacy , learnability , monetary policy , economics , new keynesian economics , exchange rate , rational expectations , keynesian economics , simple (philosophy) , open economy , monetary economics , mathematical economics , macroeconomics , mathematics , computer science , philosophy , artificial intelligence , mathematical analysis , epistemology
We study how determinacy and learnability of worldwide rational expectations equilibrium may be affected by monetary policy in a simple, two‐country, New Keynesian framework under both fixed and flexible exchange rates. We find that open economy considerations may alter conditions for determinacy and learnability relative to closed economy analyses and that new concerns can arise in the analysis of classic topics such as the desirability of exchange rate targeting and monetary policy cooperation.