Unanticipated money,output, and prices in the small economy

Recent studies of the relationship between unanticipated monetary disturbances and the level of output and prices have focussed on the implications of monetary policy for the large, essentially closed, economy. This paper investigates the determination of output, the price level, and the money stock of a small open economy. In particular, primary interest is in delineating the channels of home and foreign monetary influence, and in discriminating between the effects of home-generated and foreign-generated unanticipated monetary disturbances under the alternative regimes of a fixed, managed, and flexible exchange rate.