The international transmission of monetary policy in a dollar pricing model

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    Sammanfattning

    This paper analyses the international transmission of monetary policy in a case where all export prices are set in US dollars. 'Dollar pricing' implies that the international effects of US monetary shocks are different to those of European shocks because of asymmetric exchange rate pass-through to import prices. A dollar pricing model can explain the observed asymmetry in the transmission of monetary policy: US monetary policy affects US output more than European monetary policy affects European output. I also show that the dollar pricing model reintroduces the current account as an important channel through which monetary policy affects welfare in the short run. The paper concludes that under dollar pricing monetary expansion is a beggar-thy-neighbour policy.
    Originalspråkengelska
    UtgivningsortHelsinki
    UtgivareBank of Finland
    Antal sidor33
    ISBN (tryckt)978-952-462-406-0
    ISBN (elektroniskt)978-952-462-407-7
    StatusPublicerad - 2007
    MoE-publikationstypD4 Publicerad utvecklings- eller forskningsrapport eller studie

    Vetenskapsgrenar

    • 511 Nationalekonomi
    • avoin talousjärjestelmä
    • makrotaloustiede
    • rahapolitiikka

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