The macroeconomic stabilization of tariff shocks: What is the optimal monetary response?

• 成果类型: Article
• 署名作者: Bergin, Paul R.; Corsetti, Giancarlo
• 署名单位: University of California System; University of California Davis; National Bureau of Economic Research; European University Institute
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2023.103758
• 发表日期: 2023
• 关键词: Tariff shock; Tariff war; optimal monetary policy; production chains

摘要

In the wake of Brexit and Trump trade war, central banks face the need to reconsider the role of monetary policy in managing the inflationary-recessionary effects of hikes in tariffs. Using a New Keynesian model enriched with global value chains and firm dynamics, we show that the optimal monetary response is expansionary. It supports activity and producer prices at the expense of aggravating short-run headline inflation-contrary to the prescription of the standard Taylor rule. This holds all the more when the home currency is dominant in pricing of international trade.(c) 2023 Elsevier B.V. All rights reserved.