NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Monetary Policy in the Large Open Economy

Michael R. Darby

NBER Working Paper No. 1127 (Also Reprint No. r0645)
Issued in May 1983
NBER Program(s):   ITI   IFM

This paper discusses recent evidence on the imperfect international substitutability of goods and assets and the implications for conduct of monetary policy in a major industrial country. A simple model is developed for analysis of the simultaneous determination of money growth and the balance of payments under pegged exchange rates. Parallels are drawn to the importance of expected depreciation in determination of floating exchange rates. An assessment is made of the extent to which a central bank can simultaneously pursue both exchange rate and money supply goals through sterilized intervention. The paper concludes with the role of saving rate differences in determining nonzero equilibrium trade balances.

download in pdf format
   (380 K)

email paper

This paper is available as PDF (380 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w1127

Published: Darby, Michael R. "Monetary Policy in the Large Open Economy." Monetary Policy in Our Times, edited by Albert Ando and Hidekazu Eguchi. Cambridge, MA: M.I.T. Press, (1985), pp. 143-167.

Users who downloaded this paper also downloaded these:
Clarida, Gali, and Gertler w8604 Optimal Monetary Policy in Closed versus Open Economies: An Integrated Approach
Svensson w6545 Open-Economy Inflation Targeting
Campbell and Mankiw Consumption, Income and Interest Rates: Reinterpreting the Time Series Evidence
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us