Monetary Policy, Determinancy and Learnability in the Open Economy

J. Bullard, E. Schaling

    Research output: Working paperDiscussion paperOther research output

    Abstract

    We study how determinacy and learnability of global rational expectations equilibrium may be affected by monetary policy in a simple, two country, New Keynesian framework.The two blocks may be viewed as the U.S. and Europe, or as regions within the euro zone.We seek to understand how monetary policy choices may interact across borders to help or hinder the creation of a unique rational expectations equilibrium worldwide which can be learned by market participants. We study cases in which optimal policies are being pursued country by country as well as some forms of cooperation.We find that open economy considerations may alter conditions for determinacy and learnability relative to closed economy analyses, and that new concerns can arise in the analysis of classic topics such as the desirability of exchange rate targeting and monetary policy cooperation. Keywords: Indeterminacy, learning, monetary policy rules, new open economy macroeconomics, exchange rate regimes, second generation policy coordination.
    Original languageEnglish
    Place of PublicationTilburg
    PublisherVakgroep CentER
    Number of pages53
    Volume2005-116
    Publication statusIn preparation - 2005

    Publication series

    NameCentER Discussion Paper
    Volume2005-116

    Fingerprint

    Learnability
    Monetary policy
    Open economy
    Determinacy
    Rational expectations equilibrium
    Indeterminacy
    Exchange rate targeting
    Key words
    Policy choice
    New Keynesian
    Policy coordination
    Monetary policy rules
    Exchange rate regimes
    Optimal policy
    New open economy macroeconomics
    Euro zone

    Keywords

    • learning
    • monetairy policy
    • open economy
    • macroeconomics
    • exchange rate
    • indeterminacy
    • second generation policy coordination

    Cite this

    Bullard, J., & Schaling, E. (2005). Monetary Policy, Determinancy and Learnability in the Open Economy. (CentER Discussion Paper; Vol. 2005-116). Tilburg: Vakgroep CentER.
    Bullard, J. ; Schaling, E. / Monetary Policy, Determinancy and Learnability in the Open Economy. Tilburg : Vakgroep CentER, 2005. (CentER Discussion Paper).
    @techreport{951197e7ab4b4ffe9c3faa8255b4259b,
    title = "Monetary Policy, Determinancy and Learnability in the Open Economy",
    abstract = "We study how determinacy and learnability of global rational expectations equilibrium may be affected by monetary policy in a simple, two country, New Keynesian framework.The two blocks may be viewed as the U.S. and Europe, or as regions within the euro zone.We seek to understand how monetary policy choices may interact across borders to help or hinder the creation of a unique rational expectations equilibrium worldwide which can be learned by market participants. We study cases in which optimal policies are being pursued country by country as well as some forms of cooperation.We find that open economy considerations may alter conditions for determinacy and learnability relative to closed economy analyses, and that new concerns can arise in the analysis of classic topics such as the desirability of exchange rate targeting and monetary policy cooperation. Keywords: Indeterminacy, learning, monetary policy rules, new open economy macroeconomics, exchange rate regimes, second generation policy coordination.",
    keywords = "learning, monetairy policy, open economy, macroeconomics, exchange rate, indeterminacy, second generation policy coordination",
    author = "J. Bullard and E. Schaling",
    note = "Subsequently published in the Journal of Money, Credit and Banking (December 2009) Pagination: 53",
    year = "2005",
    language = "English",
    volume = "2005-116",
    series = "CentER Discussion Paper",
    publisher = "Vakgroep CentER",
    type = "WorkingPaper",
    institution = "Vakgroep CentER",

    }

    Bullard, J & Schaling, E 2005 'Monetary Policy, Determinancy and Learnability in the Open Economy' CentER Discussion Paper, vol. 2005-116, Vakgroep CentER, Tilburg.

    Monetary Policy, Determinancy and Learnability in the Open Economy. / Bullard, J.; Schaling, E.

    Tilburg : Vakgroep CentER, 2005. (CentER Discussion Paper; Vol. 2005-116).

    Research output: Working paperDiscussion paperOther research output

    TY - UNPB

    T1 - Monetary Policy, Determinancy and Learnability in the Open Economy

    AU - Bullard, J.

    AU - Schaling, E.

    N1 - Subsequently published in the Journal of Money, Credit and Banking (December 2009) Pagination: 53

    PY - 2005

    Y1 - 2005

    N2 - We study how determinacy and learnability of global rational expectations equilibrium may be affected by monetary policy in a simple, two country, New Keynesian framework.The two blocks may be viewed as the U.S. and Europe, or as regions within the euro zone.We seek to understand how monetary policy choices may interact across borders to help or hinder the creation of a unique rational expectations equilibrium worldwide which can be learned by market participants. We study cases in which optimal policies are being pursued country by country as well as some forms of cooperation.We find that open economy considerations may alter conditions for determinacy and learnability relative to closed economy analyses, and that new concerns can arise in the analysis of classic topics such as the desirability of exchange rate targeting and monetary policy cooperation. Keywords: Indeterminacy, learning, monetary policy rules, new open economy macroeconomics, exchange rate regimes, second generation policy coordination.

    AB - We study how determinacy and learnability of global rational expectations equilibrium may be affected by monetary policy in a simple, two country, New Keynesian framework.The two blocks may be viewed as the U.S. and Europe, or as regions within the euro zone.We seek to understand how monetary policy choices may interact across borders to help or hinder the creation of a unique rational expectations equilibrium worldwide which can be learned by market participants. We study cases in which optimal policies are being pursued country by country as well as some forms of cooperation.We find that open economy considerations may alter conditions for determinacy and learnability relative to closed economy analyses, and that new concerns can arise in the analysis of classic topics such as the desirability of exchange rate targeting and monetary policy cooperation. Keywords: Indeterminacy, learning, monetary policy rules, new open economy macroeconomics, exchange rate regimes, second generation policy coordination.

    KW - learning

    KW - monetairy policy

    KW - open economy

    KW - macroeconomics

    KW - exchange rate

    KW - indeterminacy

    KW - second generation policy coordination

    M3 - Discussion paper

    VL - 2005-116

    T3 - CentER Discussion Paper

    BT - Monetary Policy, Determinancy and Learnability in the Open Economy

    PB - Vakgroep CentER

    CY - Tilburg

    ER -

    Bullard J, Schaling E. Monetary Policy, Determinancy and Learnability in the Open Economy. Tilburg: Vakgroep CentER. 2005. (CentER Discussion Paper).