Optimal monetary policy under heterogeneity in currency trade

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dc.contributor Suomen Pankki
dc.contributor.author Bask, Mikael
dc.date.accessioned 2014-09-22T07:58:44Z
dc.date.available 2014-09-22T07:58:44Z
dc.date.issued 2007
dc.identifier.isbn 978-952-462-390-2
dc.identifier.isbn 978-952-462-391-9
dc.identifier.issn 1456-6184
dc.identifier.uri https://helda.helsinki.fi/bof/handle/123456789/7748
dc.description.abstract We embed an expectations-based optimal policy rule into a DSGE model for a small open economy that is augmented with trend extrapolation or chartism, which is a form of technical trading, in currency trade to examine the prerequisites for monetary policy. We find that a unique REE that is least-squares learnable is often the outcome when there is a limited amount of trend extrapolation, but that a less flexible inflation rate targeting may cause a multiplicity of REE. We also compute impulse-response functions for key macroeconomic variables to study how the economy returns to steady state after being hit by a shock. Keywords: determinacy, DSGE model, least-squares learning, targeting rule, technical trading, monetary policy JEL classification numbers: C62, E52, F31, F41
dc.format.extent 26 s.
dc.language.iso eng
dc.relation.ispartofseries Bank of Finland Research Discussion Papers
dc.rights https://helda.helsinki.fi/bof/copyright
dc.subject avoin talous
dc.subject rahapolitiikka
dc.subject säännöt
dc.subject korot
dc.subject valuuttakauppa
dc.subject valuuttamarkkinat
dc.subject makrotalous
dc.subject mallit
dc.subject odotukset
dc.subject valuuttakurssit
dc.subject SP
dc.subject RP
dc.subject DSGE
dc.title Optimal monetary policy under heterogeneity in currency trade
dc.type Sarjajulkaisu
dc.identifier.urn URN:NBN:fi:bof-20140807508
dc.subject.jel C62
dc.subject.jel E52
dc.subject.jel F31
dc.subject.jel F41
dc.series.name Bank of Finland Research Discussion Papers
dc.series.year 2007
dc.series.number 21/2007
dc.series.sortingnumber 0021
dc.date.publication 8.7.2007

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