Monetary Policy Rules for a Small Open Economy

In this paper, the optimal choice of a monetary target is investigated for a small open economy that is subject to foreign monetary policy shocks. In contrast to large parts of the literature, pegging the exchange rate is never the best policy choice for the small open economy in our model. Instead, monetary targeting and, depending on the parameter combination, producer price index targeting come closest to the optimal policy rule in terms of welfare. Generally, the welfare performance of the simple targeting rules under consideration hinge critically on the degree of pass-through in the home economy and in the rest of the world.     

Monetary Policy and Exchange Rate Volatility in a Small Open Economy

We lay out a small open economy version of the Calvo sticky price model, and show how the equilibrium dynamics can be reduced to a simple representation in domestic inflation and the output gap. We use the resulting framework to analyse the macroeconomic implications of three alternative rule-based policy regimes for the small open economy: domestic inflation and CPI-based Taylor rules, and an exchange rate peg. We show that a key difference among these regimes lies in the relative amount of exchange rate volatility that they entail. We also discuss a special case for which domestic inflation targeting constitutes the optimal policy, and where a simple second order approximation to the utility of the representative consumer can be derived and used to evaluate the welfare losses associated with the suboptimal rules.     

Monetary Policy Games and International Migration in a Small Open Economy

The paper shows that international migration may improve the position of both policymakers and unions in small open economies irrespective of whether they cooperate or not. This result implies that both unions and policymakers in small open economies may welcome a further increase in international labor flow in the future. When allowance is made for real GDP per capital considerations on behalf of the policymaker, it is found that aggressive union behavior may increase the inflationary bias. Aggressive unions may insulate themselves, while soft unions lose. The presence of migration does not necessarily lead to a better outcome.     

Monetary Policy and Exchange Rate Interactions in a Small Open Economy

The transmission mechanisms of monetary policy in a small open economy like Norway are analysed through structural VARs, with special emphasis on the interdependence between monetary policy and exchange rate movements. By imposing a long‐run neutrality restriction on the real exchange rate, thereby allowing the interest rate and the exchange rate to react simultaneously to news, I find considerable interdependence between monetary policy and the exchange rate. In particular, following a contractionary monetary policy shock, the real exchange rate immediately appreciates, after which it gradually depreciates back to the baseline. The results are found to be consistent with findings from an “event study”.     

开放经济下的货币政策效果

文章从我国目前货币政策的效果分析入手 ,提出国内货币政策运行机制改革和外汇体制改革必须结合进行 ,以及汇率和利率政策的搭配问题。提出要提高我国货币政策的有效性 ,必须将固定汇率制转变到管理的浮动汇率制上来 ,逐步加强中央银行对外汇市场的宏观调控和加强我国货币市场建设 ,完善对货币供应量内生性波动的冲销手段。     

Capital Mobility, Consumption Substitutability and the Effects of Monetary Policy in Open Economies

Abstract. I use a dynamic general equilibrium two‐country optimizing model to analyze the implications of international capital mobility for the short‐run effects of monetary policy in an open economy. The model implies that the substitutability of goods produced in different countries plays a central role for the impact of changes in the degree of international capital mobility on the effects of monetary policy. Paralleling the results of the traditional Mundell–Fleming model, a higher degree of international capital mobility magnifies the short‐run output effects of monetary policy only if the Marshall–Lerner condition, which is linked to the cross‐country substitutability of goods, holds.     

Capital Accumulation and Convergence in a Small Open Economy

Outward‐oriented economies seem to grow faster than inward‐looking ones. Does the literature on convergence have anything to say on this? In the dynamic Heckscher–Ohlin–Samuelson model, with factor‐price equalization, there is no convergence of incomes. This is because with identical preferences and return to capital, irrespective of initial levels, the growth rates of consumption are the same. In the specific factors' model, there is factor‐price equalization in the long run, but incomes depend on endowments of non‐accumulable factors. Different specifications for the intersectorally mobile factors have different implications for development (as well as convergence).     

Capital and Consumption Tax Reforms in a Small Open Economy

The effects of a reform in capital and consumption taxes on private welfare and government tax revenue are examined for a small open, capital‐importing economy. A trade‐off between private welfare and tax revenue is encountered in maximizing social welfare. Nonetheless, lowering capital taxes and raising consumption taxes can increase both private welfare and tax revenue if the initial tax rates are not optimal. In addition, a tax reform by this fashion is a likely response to a rise in the foreign rate of return on capital.     

投机资本流入、利率政策的两难问题和货币政策工具的最优搭配

本文构建理论模型分析了如何选择利率和存款准备金率工具的最优搭配,从而在防止通货膨胀和防止热钱流入之间取得最佳平衡。模型显示存款准备金率只对银行贷款起直接抑制作用,当人们通过非银行渠道融资时,可规避准备金率的限制,使其效果下降。而利率政策通过套利机制也对非银行融资起直接限制作用。而且利率政策可以避免对信贷资金分配的不对称限制,使资金分配更平衡有效,所以利率政策相对占优。但当利率吸引投机资本时,可搭配使用准备金率政策以减少利率需要提高的程度,以减少热钱流入。     

Alternative Monetary Policy Rules for Small Open Economies

This paper examines the relative merits of alternative monetary policy rules for a small open economy. Rules considered target: the exchange rate, price level, nominal income, or a monetary aggregate. The standard framework employed in previous comparisons of these rules fails to take account of important features of small open economies. In particular, the standard framework fails to consider the effects on aggregate supply of exchange rate adjustments resulting from adherence to policy rules. Incorporating these effects is shown to weaken the case for targeting nominal income and, more generally, to complicate the ranking of policy rules.     

Social Security Systems,Human Capital,and Growth in a Small Open Economy

We consider a small open economy in which the level of public education funding is determined by popular vote. We show that growth can be enhanced by the introduction of pay‐as‐you‐go pensions even if the growth rate of aggregate wages falls short of the interest rate. The reason is that the pay‐as‐you‐go (PAYG) system allows future retirees to partially internalize positive externalities of public education due to the positive effect of higher future labor productivity on their pension benefits. The majority support for education funding will be especially strong when the PAYG benefit formula is flat, i.e., progressively redistributive. If a flat benefit PAYG pension system is in place then the economy will achieve the highest growth rate relative to the alternative pension system designs. While such PAYG pension system may be opposed by the majority of working individuals due to inferior returns to their pension contributions relative to a funded scheme, it is likely to be politically sustained by a coalition of older individuals and lower income workers.     

Nontraded Goods,Capital Taxes,and Temporary Immigration in a Small Open Economy

This paper extends the standard (one-good, two-factor) model of international capital and labor mobility by incorporating a nontraded good within a small capital-exporting, labor-importing country. It examines, from this country's perspective, the effects of capital taxes and temporary immigration on the nominal wage, and on welfare, and derives the optimal policy toward capital. It demonstrates, among other things, that (i) the optimal policy toward capital may be a tax on its domestic rate of return, depending on the factor intensity of the nontraded good and on the relationship between capital and labor in production, and (ii) the distinction between temporary and permanent immigration is important in evaluating its effects on various economic variables. [F20, F22]     

Monetary Policy in a Very Open Economy: Some Major Analytical Issues

This paper develops three considerations relevant to the possibility of modification of the Hong Kong currency board system for conducting monetary/exchange‐rate policy. The first concerns the system employed by Singapore, an economy similar in several ways to Hong Kong's, whereby the exchange rate is adjusted periodically in activist response to inflation and output developments. The second concerns a generalization, one that calls for adjustments of a weighted average of exchange rate and interest rate instruments, so designed to be effective whether the economy is, or is not, in a liquidity‐trap situation. Finally, the third topic concerns political‐economy aspects of policy, which tend to incline against the use of the activist systems.     

开放条件下我国货币政策的国际协调

开放条件下，一国货币政策进行国际协调是十分重要的。本文对货币政策国际协调的理论研究作了简要回顾，并结合我国1994年以来货币政策的实践进行分析。文章发现，我国货币政策进行国际协调的实践并不多，与汇率政策之间多次存在冲突，与美国货币政策有过简单协调。当前人民币升值压力实际上来自我国货币政策如何与美国等发达国家的经济政策进行协调。从过去实践来看，我国货币政策国际协调的问题主要是如何在现存汇率体制下实现货币供给的独立性。文章认为，在进行汇率调整基础上，我国货币政策进行国际协调的难度将降低。     

Structural Balance of Trade Deficits in a Small Open Economy with Exogenous Capital Flows: A Monetary Approach*

This paper presents a ‘structural’ balance of trade model which can be interpreted as combining two major building blocks. The first one is identical to the monetary approach to the balance of payments. The second, which explains the price level, consists of the orthodox Scandinavian model of price and wage determination. It is shown that under these assumptions the balance of trade deficit can be broken down into a structural, an imported, and a ‘home-made’ component. A n empirical illustration of the structural balance of trade model is given for the New Zealand economy.     

Migration Policy in a Small Open Economy with a Dual Labor Market

The paper uses a two–sector efficiency–wage model to analyze the consequences of immigration for a small open economy with a dual labor market. Immigrants are characterized by an (exogenous) return probability. Legal regulations impose preferential hiring of natives or "old" immigrants. As a result, there is sectoral segregation between natives and immigrants, leading to discrimination of the type equal pay for equal work,but unequal "work." In the short run (with sector–specific capital), immigration has a positive first–order impact on natives' welfare if migration policy favors segregation through high return rates or restrictive hiring practices ("guest–worker system"). In the long run, its effect is only determined by factor intensities (2 ¥ 2 model). Finally, the improved integration of migrants yields efficiency gains and improves aggregate welfare of all residents.     

Fiscal Policy and Welfare in a Small Open Economy with Imperfect Competition

This paper considers the effects of fiscal policy in a two-sector small open economy, with unionized labour markets, and heterogeneous types of imperfect competition in the product markets. By making the marginal propensity to import endogenous, the paper shows that there is no robust or general relationship between the balanced-budget multiplier and the degree of imperfect competition. The fiscal multiplier with distortionary taxes can be positive or negative, depending on the size of the importables sector and the foreign firm's market share. The normative rule for fiscal policy depends on the size of the fiscal multiplier. An increase in economic activity is insufficient by itself to induce the government to over-supply public goods relative to the Walrasian case.     

全国“货币市场与资本市场关系”理论研讨会综述

2001年3月24日,中国人民大学财政金融学院和中国人民大学金融与证券研究所(FSI)主办了"货币市场与资本市场关系"理论研讨会.研讨会的主题是货币市场与资本市场的关系及银行信贷资金流入股票市场的管理政策.     

资产价格与货币政策

文章研究了资产价格与货币政策的关系。论述了资产价格在货币政策传导中的作用及其传导机制,并讨论了央行是否能够通过货币政策对资产价格进行有效控制来防止资产价格泡沫损害宏观经济。