Year: 2001
Type: report
Abstract: This paper develops a new open economy macro model of optimal monetary for a small open economy.Our main result is that in this model, the optimal policy problem for the small open economy is isomorphic to the closed economy case studied in Clarida, Gali, Gertler (1999).In particular, the optimal policy can be implemented with a Taylor Rule under which the domestic interest rate adjusts to the equilibrium real interest rate and expected inflation in domestic prices.
DOI: 10.3386/w8604
Authors: Richard Clarida, Jordi Gali, Mark Gertler
Institutions: Universitat Pompeu Fabra, New York University, Columbia University
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1573922937