Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/36679
Authors: 
Tervala, Juha
Engler, Philipp
Year of Publication: 
2010
Series/Report no.: 
School of Business & Economics Discussion Paper 2010/6
Abstract: 
This paper examines whether monetary expansion is a beggar-thyself or beggar-thy-neighbour policy. Obstfeld and Rogoff (1995) show that monetary expansion under producer currency pricing increases domestic and foreign overall welfare, in cases where the crosscountry substitutability is high. If the cross-country substitutability is low, then monetary expansion is a beggar-thyself policy that reduces domestic welfare and increases foreign welfare (Corsetti & Pesenti 2001; Tille 2001). In this paper, we will show that regardless of whether the cross-country substitutability is high or low, monetary expansion is always a beggar-thyself policy in the short run.
Subjects: 
Open economy macroeconomics
monetary policy
beggar-thyself
beggar-thy-neighbour
JEL: 
E32
E52
F30
F41
ISBN: 
978-3-941240-18-6
Document Type: 
Working Paper

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