Capital Mobility and the Output-inflation Tradeoff
Author: Prakash Loungani
Publisher:
Published: 2000
Total Pages: 28
ISBN-13:
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Capital Mobility and the Output-Inflation Tradeoff
Author: Prakash Loungani
Publisher:
Published: 2006
Total Pages: 23
ISBN-13:
DOWNLOAD EBOOKIdentifying determinants of the output-inflation tradeoff has long been a key issue in business cycle research. We provide evidence that in countries with greater restrictions on capital mobility, a given reduction in the inflation rate is associated with a smaller loss in output. This result is shown to be consistent with theoretical presumption from a version of the Mundell-Fleming model. Restrictions on capital mobility are measured using the IMF's Annual Report on Exchange Rate Arrangements and Exchange Restrictions. Estimates of the output-inflation tradeoff are taken from previous studies, viz., Lucas (1973) and Ball, Mankiw and Romer (1988).
Can Capital Controls Alter the Inflation-unemployment Trade-off?
Author: Assaf Razin
Publisher:
Published: 1995
Total Pages: 32
ISBN-13:
DOWNLOAD EBOOKIt is well-known that, in the Mundell-Fleming model, capital mobility creates a channel through which permanent (transitory) shocks to aggregate demand such as fiscal and trade shocks are completely (partially) neutralized by the response of the real exchange rate. An important policy implication of the model which went largely unnoticed is how the transmission of these shocks under different degrees of capital mobility may alter the inflation-unemployment tradeoff, i.e., the Phillips Curve. In the context of the stochastic Mundell-Fleming model, we show that capital controls reduce the output/employment variations at the expense of bigger variations in inflation rates. When the policy maker puts heavier weight on stable employment than on stable inflation, therefore, his/her objective can be attained more easily under capital controls.
Inflation-output Tradeoffs as Equilibrium Outcome of Globalization
Author: Alon Binyamini
Publisher:
Published: 2008
Total Pages: 33
ISBN-13:
DOWNLOAD EBOOKThe paper provides an integrated analysis of globalization effects on the inflation-output tradeoff and monetary policy in the New-Keynesian framework. The prediction of the analysis is threefold. First, labor, goods, and capital mobility flatten the Phillips curve, the tradeoff between inflation and activity. Second, the same globalization forces lead the welfare-based monetary policy to be more aggressive with regard to inflation fluctuations, and at the same time, more benign with respect to the output-gap fluctuations. Third, the equilibrium response of inflation to supply and demand shocks is more moderate, and the response of the output gap to these shocks is more pronounced, when the economy opens up; under such welfare-based monetary policy.
Flattened Inflation-output Tradeoff and Enhanced Anti-inflation Policy
Author: Assaf Razin
Publisher:
Published: 2007
Total Pages: 34
ISBN-13:
DOWNLOAD EBOOKThe paper provides a unified analysis of globalization effects on the Phillips curve and monetary policy, in a New-Keynesian framework. The main proposition of the paper is twofold. Labor, goods, and capital mobility flatten the tradeoff between inflation and activity. If policy makers are guided by the welfare criterion of the representative household, globalization forces also lead monetary policy to be more aggressive with regard to inflation fluctuations but, at the same time, more benign with respect to the output-gap fluctuations.
The 'new Keynesian' Phillips Curve
Author: Assaf Razin
Publisher:
Published: 2001
Total Pages: 28
ISBN-13:
DOWNLOAD EBOOKThe paper extends Woodford's (2000) analysis of the closed economy Phillips curve to an open economy with both commodity trade and capital mobility. We show that consumption smoothing, which comes with the opening of the capital market, raises the degree of strategic complementarity among monopolistically competitive suppliers, thus rendering prices more sticky and magnifying output responses to nominal GDP shocks.
Capital Mobility and the Output-inflation Tradeoff
Author: Prakash Loungani
Publisher:
Published: 1996
Total Pages: 64
ISBN-13:
DOWNLOAD EBOOKInflation Targeting and Capital Openness in the Small Open Economy
Author: Sanchita Mukherjee
Publisher:
Published: 2011
Total Pages: 232
ISBN-13:
DOWNLOAD EBOOKCapital Mobility
Author: Leonardo Leiderman
Publisher: Cambridge University Press
Published: 1994-07-14
Total Pages: 400
ISBN-13: 9780521454384
DOWNLOAD EBOOKThis edited volume examines capital mobility in both industrialised and developing countries.
Inflation Targeting and Exchange Rate Management In Less Developed Countries
Author: Mr.Marco Airaudo
Publisher: International Monetary Fund
Published: 2016-03-08
Total Pages: 65
ISBN-13: 1475523165
DOWNLOAD EBOOKWe analyze coordination of monetary and exchange rate policy in a two-sector model of a small open economy featuring imperfect substitution between domestic and foreign financial assets. Our central finding is that management of the exchange rate greatly enhances the efficacy of inflation targeting. In a flexible exchange rate system, inflation targeting incurs a high risk of indeterminacy where macroeconomic fluctuations can be driven by self-fulfilling expectations. Moreover, small inflation shocks may escalate into much larger increases in inflation ex post. Both problems disappear when the central bank leans heavily against the wind in a managed float.
