|
EconStor >
Eidgenössische Technische Hochschule (ETH) Zürich >
KOF Konjunkturforschungsstelle, ETH Zürich >
KOF Working Papers, KOF Konjunkturforschungsstelle, ETH Zürich >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/50814
|
| | |
| Title: | | International transmission effects of monetary policy shocks: Can asymmetric price setting explain the stylized facts?  |
| Authors: | | Schmidt, Caroline |
| Issue Date: | | 2005 |
| Series/Report no.: | | Arbeitspapiere // Konjunkturforschungsstelle, Eidgenössische Technische Hochschule Zürich 102 |
| Abstract: | | How does an unexpected domestic monetary expansion affect the foreign economy? Does it induce an increase or a decline in foreign production? In the traditional two-country Mundell-Fleming model, monetary policy has beggar-thy-neighbor effects. Yet, empirical evidence from VARs indicates that U.S. monetary policy has positive international transmission effects on both foreign (non-U.S. G-7) output and aggregate demand. In this paper, I will show that a two-country dynamic general equilibrium model with sticky prices can account for these stylized facts if we allow for international asymmetries in the price-setting behavior of firms. If U.S. firms set export prices in their own currency only (producer-currency pricing), whereas producers in the rest of the world price their exports to the U.S. in the local currency of the export market (local-currency pricing), a U.S. monetary expansion is found to increase output and aggregate demand abroad. |
| Subjects: | | Local-currency pricing Producer-currency pricing New Open Economy Macroeconomics International transmission effects of monetary policy |
| JEL: | | F41 E52 |
| Persistent Identifier of the first edition: | | doi:10.3929/ethz-a-004957474 |
| Document Type: | | Working Paper |
| Appears in Collections: | | KOF Working Papers, KOF Konjunkturforschungsstelle, ETH Zürich
|
| Files in This Item:
| |
|
| No. of Downloads:
| |
| last Month |
last 3 Month |
total |
|
|
|
|
|
| |
| | |
Download bibliographical data as:
BibTeX
|
| |
Share on:http://hdl.handle.net/10419/50814
|
Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.
|