Monetary Policy in a Small Open Economy with Credit Goods Production

October 1, 1998

Preview Citation

Format: Chicago

Jorge A Chan-Lau. Monetary Policy in a Small Open Economy with Credit Goods Production, (USA: International Monetary Fund, 1998) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The paper analyzes the effects of monetary policy in a dynamic model of a small open economy with cash and credit goods production, where government consumption is financed by seignorage. It shows that the interrelationships between the growth rate of the monetary aggregate and the technological properties of the economy have an important bearing on the existence and uniqueness of equilibrium, the optimal inflation rate, and the occurrence of explosive hyperinflations. In consequence, the paper concludes that monetary policy does matter in the long run.

Subject: Consumption, Credit, Currencies, Inflation, Labor

Keywords: Nominal interest rate, WP

Publication Details

Pages:

19
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1998/153
Stock No:

WPIEA1531998
ISBN:

9781451922448
ISSN:

1018-5941

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