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dc.contributor.authorMichaelis, Jochenen_US
dc.date.accessioned2012-01-12en_US
dc.date.accessioned2012-04-04T13:49:49Z-
dc.date.available2012-04-04T13:49:49Z-
dc.date.issued2012en_US
dc.identifier.urihttp://hdl.handle.net/10419/56504-
dc.description.abstractIn this paper we introduce the cost channel of monetary policy (e.g., Ravenna and Walsh, 2006) into an otherwise standard New Keynesian model of a two-country monetary union, which is being hit by aggregate, asymmetric and idiosyncratic shocks. The single central bank implements the optimal discretionary monetary policy by setting the union interest rate.The cost channel makes monetary policy less effective in combatting inflation, but it is shown that the optimal response to the decline in effectiveness is a stronger use of the instrument. Moreover, we show how the sign of the spillover effects of idiosyncratic shocks depends on the strength of the cost channel. If the cost channel exceeds a well-defined threshold, then the interest rate turns into a supply-side instrument.en_US
dc.language.isoengen_US
dc.publisherUniv., Dep. of Business Administration & Economics Marburgen_US
dc.relation.ispartofseriesJoint discussion paper series in economics 03-2012en_US
dc.subject.jelE31en_US
dc.subject.jelE52en_US
dc.subject.jelF41en_US
dc.subject.ddc330en_US
dc.subject.keywordcost channelen_US
dc.subject.keywordoptimal monetary policyen_US
dc.subject.keywordmonetary unionen_US
dc.subject.keywordopen economy macroeconomicsen_US
dc.subject.stwGeldpolitiken_US
dc.subject.stwKostenen_US
dc.subject.stwTransmissionsmechanismusen_US
dc.subject.stwWährungsunionen_US
dc.subject.stwZwei-Länder-Modellen_US
dc.subject.stwNeukeynesianische Makroökonomiken_US
dc.subject.stwTheorieen_US
dc.titleOptimal monetary policy in a currency union: The role of the cost channelen_US
dc.typeWorking Paperen_US
dc.identifier.ppn682937053en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:MAGKS Joint Discussion Paper Series in Economics, Universität Marburg

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