Dai, Meixing and Sidiropoulos, Moïse and Spyromitros, Eleftherios (2008): Monetary policy transparency and inflation persistence in a small open economy.
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Using a New Keynesian small open economy model, we examine the effects of central bank transparency on inflation persistence. We have found that more opacity could reinforce the effect of persistent shocks on the level and variability of endogenous variables if the difference between the interest elasticity of domestic goods demand and the degree of trade openness is sufficient large or sufficiently low, judging on structural parameters characterising the economy, the central bank preference and its initial degree of opacity. Our result implies that, under perfect capital mobility, a high degree of domestic financial development is a good reason for increasing the transparency.
|Item Type:||MPRA Paper|
|Original Title:||Monetary policy transparency and inflation persistence in a small open economy|
|Keywords:||Central bank’s transparency, open economy, inflation persistence, real exchange rate persistence|
|Subjects:||E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy
F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics
|Date Deposited:||07. Mar 2009 06:23|
|Last Modified:||20. Feb 2013 01:53|
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