Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/22359
Authors: 
Bofinger, Peter
Mayer, Eric
Wollmershäuser, Timo
Year of Publication: 
2006
Series/Report no.: 
Würzburg economic papers 66
Abstract: 
For the open economy the workhorse model in intermediate textbooks still is the Mundell-Fleming model, which basically extends the IS-LM model to open economy problems. The purpose of this paper is to present a simple New Keynesian model of the open economy, that introduces open economy considerations into the closed economy consensus version and that still allows for a simple and comprehensible analytical and graphical treatment. Above all, our model provides an efficient tool kit for the discussion of the costs and benefits of fixed and flexible exchange rates, which also was at the core of the Mundell-Fleming model.
Subjects: 
open economy
inflation targeting
monetary policy rules
New Keynesian macroeconomics
JEL: 
F41
E50
E10
A20
Document Type: 
Working Paper

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