Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212175 
Year of Publication: 
2010
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 18/2010
Publisher: 
Bank of Finland, Helsinki
Abstract: 
In this paper we build a dynamic stochastic general equilibrium model of a small open monetary union with optimal monetary and fiscal policy, to study the transmission of country specific shocks and associated exchange rate fluctuations. We show that movements of the monetary union s exchange rate stabilize the output fluctuations inside the monetary union, reducing the need for fiscal stabilization. We also show that, under the optimal policy, fluctuations in the exchange rate and the union-wide aggregates are affected by the differences in the degree of nominal rigidities among the monetary union member countries.
Persistent Identifier of the first edition: 
ISBN: 
978-952-462-621-7
Document Type: 
Working Paper

Files in This Item:
File
Size





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