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Volume 61, Issue 5

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An Announced Regime Switch: Optimal Policy for the Transition Period

Brázdik, František

Year: 2011   Volume: 61   Issue: 5   Pages: 411-431

Abstract: The novelty of this article is its theoretical framework, which allows for modeling of an announced change in the type of monetary regime operated. The behavior of a small open economy that has announced the adoption of a monetary policy regime of offsetting nominal exchange rate changes is analyzed. The optimal monetary regime for the transition period and its effects on macroeconomic stability are studied. Moreover, the evolution of business cycle synchronization over the transition is analyzed.

JEL classification: E17, E31, E52, E58, E61, F02, F41

Keywords: new-Keynesian models, small open economy, monetary regime change

RePEc: http://ideas.repec.org/a/fau/fauart/v61y2011i5p411-431.html

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