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http://ssrn.com/abstract=231171
 
 

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Monetary Policy Rules and the Exchange Rate


Gianluca Benigno


Bank of England - Monetary Assessment and Strategy Division; London School of Economics & Political Science (LSE) - Department of Economics

Pierpaolo Benigno


New York University - Stern School of Business; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)



Abstract:     
A positive and normative evaluation of alternative monetary policy regimes is addressed in a simple two-country general equilibrium model. The behavior of the exchange rate, as well as of the other macroeconomic variables, depends crucially on the monetary regime chosen, though not necessarily on monetary shocks. The centralized welfare criterion presents a trade-off between stabilizing the economy around the flexible-price allocation and reducing the volatility of the nominal interest rates. Some form of control of the exchange rate is desirable.

Number of Pages in PDF File: 61

JEL Classification: E50, E58, F41, F42

working papers series





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Date posted: July 30, 2000  

Suggested Citation

Benigno, Gianluca and Benigno, Pierpaolo, Monetary Policy Rules and the Exchange Rate. Available at SSRN: http://ssrn.com/abstract=231171 or http://dx.doi.org/10.2139/ssrn.231171

Contact Information

Gianluca Benigno (Contact Author)
Bank of England - Monetary Assessment and Strategy Division ( email )
Threadneedle Street
London EC2R 8AH
United Kingdom
+44 20 7601 4369 (Phone)
+44 20 7601 4177 (Fax)
London School of Economics & Political Science (LSE) - Department of Economics ( email )
Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 7807 (Phone)
Pierpaolo Benigno
New York University - Stern School of Business ( email )
269 Mercer Street
New York, NY 10003
United States
212-998-8958 (Phone)
212-995-4186 (Fax)
HOME PAGE: http://homepages.nyu.edu/~pb50
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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