Benigno, Gianluca and Benigno, Pierpaolo (2003) Price stability in open economies. Review of Economic Studies, 70 (4). pp. 743-764. ISSN 0034-6527
Full text not available from this repository.Abstract
This paper studies the theoretical conditions under which price stability is the optimal policy in a two-country open-economy model with imperfect competition and price stickiness. Special conditions on the levels of country-specific distortionary taxation and the intratemporal and intertemporal elasticities of substitution need to be satisfied. These restrictions apply to both cooperative and non-cooperative settings. Importantly, we show that cooperative and non-cooperative solutions do not coincide despite market completeness and producer currency pricing. We study the conditions under which quadratic approximations of single countries' welfare can be correctly evaluated by relying only on log-linear approximations of the equilibrium conditions
| Item Type: | Article |
|---|---|
| Official URL: | http://www.oxfordjournals.org/ |
| Additional Information: | © 2003 Review of Economic Studies Ltd |
| Divisions: | Economics |
| Subjects: | H Social Sciences > HB Economic Theory |
| JEL classification: | E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level; Inflation; Deflation E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy (Targets, Instruments, and Effects) F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics |
| Date Deposited: | 14 Apr 2011 15:34 |
| Last Modified: | 11 Nov 2024 23:18 |
| URI: | http://eprints.lse.ac.uk/id/eprint/35630 |
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