Money growth rules as stabilization policies in open economies
Date
2008
Authors
Weder, M.
Editors
Advisors
Journal Title
Journal ISSN
Volume Title
Type:
Journal article
Citation
International Economic Journal, 2008; 22(4):525-537
Statement of Responsibility
Mark Weder
Conference Name
Abstract
High degrees of relative risk aversion induces indeterminacy in cash-in-advance economies. In a small open economy context, this paper finds that endogenous money growth rules can pre-empt such sunspot equilibria in an open economy context. The most promising candidates are policies that actively target past inflation movements or aggregate demand as well as the expected price level.