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http://dspace.mediu.edu.my:8181/xmlui/handle/10419/17776| Title: | Exchange Rate Expectations Redux and Monetary Policy |
| Keywords: | F31 F41 G15 ddc:330 Monetary policy Exchange rate expectations Noise trading Geldpolitik Schock Makroökonomischer Einfluß Wechselkurstheorie Erwartungstheorie Noise Trading Offene Volkswirtschaft Dynamisches Gleichgewicht Theorie |
| Issue Date: | 16-Oct-2013 |
| Publisher: | Kiel Institute for the World Economy (IfW) Kiel |
| Description: | This paper uses a dynamic general equilibrium optimizing two-country model to analyze how the formation of exchange rate expectations shapes the effects of monetary policy shocks in open economies. The model implies that the short-run output effects of permanent monetary policy shocks diminish if 'noise traders' in the foreign exchange market form regressive exchange rate expectations. If the influence of these noise traders is strong enough, a permanent expansionary monetary policy shock can result in a temporary decline of the output in the country in which it takes place. The output effects of temporary monetary policy shocks are magnified when noise traders form regressive exchange rate expectations. |
| URI: | http://koha.mediu.edu.my:8181/xmlui/handle/10419/17776 |
| Other Identifiers: | http://hdl.handle.net/10419/17776 ppn:350944490 |
| Appears in Collections: | EconStor |
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