Monetary policy rules in the open economy: effects on welfare and business cycles
University of Bonn; Centre for Economic Policy Research
Small open economy DSGE model with staggered Calvo price setting, pricing-to-market behavior, incomplete international financial markets (bonds only), physical capital with adjustment costs, and shocks to domestic productivity, world interest r
intermediate goods firms: monopolistic competition with Calvo pricing and pricing-to-market; final goods firms: perfect competition; importers: monopolistic competition with Calvo pricing
Table 3 Col. 3
Producer currency pricing (PCP) variant with optimized rule, four simultaneous shocks