논문목차

논문목차

Relative Price Distortion and Optimal Monetary Policy in Open Economies
  • Author
    Jinill Kim, Andreu T. Levin, Tack Yun
  • Year
    2008
  • Volume
    Vol.24
  • Number
    No.1
  • This paper provides a closed-form solution for optimal monetary policy in a two-country model with Calvo-type sticky prices. Initial price dispersion makes it suboptimal to completely stabilize the producer price index, and the optimal policy would entail a price-level targeting. The solution also indicates that the isomorphism of optimal policy rules between closed and open economy breaks down unless the utility function is logarithmic in consumption.
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