On the relevance of exchange rate regimes for stabilization policy

• 成果类型: Article
• 署名作者: Adao, Bernardino; Correia, Isabel; Teles, Pedro
• 署名单位: Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2009.02.005
• 发表日期: 2009
• 页码: 1468-1488
• 关键词: Optimal currency areas; monetary union; Fixed exchange rates; Fiscal and monetary policy; Stabilization Policy; labor mobility; nominal rigidities

摘要

This paper assesses the relevance of the exchange rate regime for stabilization policy. Using both fiscal and monetary policy, we conclude that the exchange rate regime is irrelevant. This is the case independently of the severity of price rigidities, independently of asymmetries across countries in shocks and transmission mechanisms. The only relevant conditions are on the mobility of labor and financial assets. The results can be summarized with the claim that every currency area is an optimal currency area. However, with labor mobility or tradable state-contingent assets, additional policy instruments would be required to establish the irrelevance result. (C) 2009 Elsevier Inc. All rights reserved.