Optimal monetary policy in a currency area

• 成果类型: Article
• 署名作者: Benigno, P
• 署名单位: New York University
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/S0022-1996(03)00055-2
• 发表日期: 2004
• 页码: 293-320
• 关键词: Optimal monetary policy; Currency area; sticky prices; welfare analysis; Terms of trade

摘要

This paper investigates how monetary policy should be conducted in a two-region general equilibrium model with monopolistic competition and price stickiness. This framework delivers a simple welfare criterion based on the utility of the consumers that can be used to evaluate monetary policy in a currency area. If the two regions share the same degree of nominal rigidity, the terms of trade are completely insulated from monetary policy and the optimal outcome is obtained by targeting a weighted average of the regional inflation rates. These weights coincide with the economic sizes of the region. If the degrees of rigidity are different, the optimal plan implies a high degree of inertia in the inflation rate. But an inflation targeting policy in which higher weight is given to the inflation in the region with higher degree of nominal rigidity is nearly optimal. (C) 2003 Elsevier B.V. All rights reserved.