Identifying monetary policy in a small open economy under flexible exchange rates

• 成果类型: Article
• 署名作者: Cushman, DO; Zha, T
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Atlanta; University of Saskatchewan
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/S0304-3932(97)00029-9
• 发表日期: 1997
• 页码: 433-448
• 关键词: small open economy; identification; block exogeneity; monetary policy

摘要

Previous empirical study on the effects of monetary policy shocks in small open economies has generated puzzling dynamic responses in various macroeconomic variables. This paper argues that these puzzles derive from an identification of monetary policy that is inappropriate for such economies. To remedy this, it is proposed that a structural model be estimated to explicitly account for the features of the small open economy. Such a model is applied to Canada with tightly estimated results overall, The dynamic responses to the identified monetary policy shock are consistent with standard theory and highlight the exchange rate as a transmission mechanism.