EconStor >
University of California (UC) >
UC Santa Cruz, Santa Cruz Institute for International Economics (SCIIE) >
Working Papers, Santa Cruz Institute for International Economics, UC Santa Cruz >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/64102
  
Title:Monetary policy choices in emerging market economies: The case of high productivity growth PDF Logo
Authors:Natalucci, Fabio M.
Ravenna, Federico
Issue Date:2007
Series/Report no.:Working Papers, Santa Cruz Center for International Economics 08-04
Abstract:We develop a general equilibrium model of an emerging market economy where productivity growth differentials between tradable and non-tradable sectors result in an equilibrium appreciation of the real exchange ratethe so-called Balassa-Samuelson effect. The paper explores the dynamic properties of this economy and the welfare implications of alternative policy rules. We show that the real exchange rate appreciation limits the range of policy rules that, with a given probability, keep inflation and exchange rate within predetermined numerical targets. We also find that the Balassa-Samuelson effect raises by an order of magnitude the welfare loss associated with policy rules that prescribe active exchange rate management.
Subjects:Balassa-Samuelson effect
optimal monetary policy
exchange rate regimes
emerging markets
European Monetary Union
JEL:E52
E31
F02
F41
Document Type:Working Paper
Appears in Collections:Working Papers, Santa Cruz Institute for International Economics, UC Santa Cruz

Files in This Item:
File Description SizeFormat
604561822.pdf735.29 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/64102

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.