Optimal monetary policy in a currency area

Benigno, Pierpaolo

doi:10.1016/s0022-1996(03)00055-2

Cited by 409 publications

(563 citation statements)

References 21 publications

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“…2 Benigno (2004) também segue uma linha semelhante de estudo de heterogeneidade, mas avaliando a política monetária ótima em uma união monetária com dois países. 3 Aoki (2001) Este artigo contribui para a literatura porque introduz, no estudo da política monetária brasileira, séries de preços desagregadas, permitindo avaliar mudanças de preços relativos, além de fenômenos que costumam ocorrer apenas no âmbito da firma ou da indústria, e que são obscuros quando tratamos de dados agregados.…”

Section: Introductionunclassified

Dispersão na fixação de preços no Brasil

Guillen¹,

García²

2011

Rev. Bras. Econ.

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Estudamos os impactos de uma mudança na taxa de juros e na taxa de câmbio sobre a inflação no Brasil. Com a desagregação do IPCA em 512 subitens, é possível mostrar que, após um aumento da taxa de juros ou uma depreciação cambial, a dispersão dos preços se altera. Os resultados indicam, ainda, que leva entre seis e doze meses até que a estrutura de preços volte a ser aquela que prevalecia antes da mudança. Este resultado é interessante por mostrar que não só o nível de preços agregado é afetado, mas a distribuição também, e leva até um ano para que esta se restabeleça.
We study how inflation in Brazil reacts to changes in the interest rates and in the exchange rate. Using a disaggregation of IPCA within 512 items, it is possible to show that, after an interest rate increase or exchange rate depreciation, price dispersion alters. Our results indicate, furthermore, that it takes from six to twelve months until price structure returns to the one that existed before the change. This result seems interesting because it shows that all price distribution is affected by a macroeconomic shock

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Section: Introductionunclassified

Dispersão na fixação de preços no Brasil

Guillen¹,

García²

2011

Rev. Bras. Econ.

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“…While the optimal weight in this scenario once again resembles (8) in the case with independent shocks, allowing for ' " 1 ;" 2 6 = 0 in ‡uences the condition determining whether a country will be over-or under-represented compared to its economic size (see Appendix 3). In particular, if preference shocks are positively correlated, it might be optimal to over-represent (or underrepresent) member countries with very stable (or very unstable) preferences irrespective of their economic size.…”

Section: Correlated Preference Shocksmentioning

confidence: 97%

“…While reducing the degree of over-representation will ensure that the decision-making process within the ECB Council will be more likely to resemble the perspective of a benevolent European social planner, there are a number of arguments that caution against a too ambitious reform. For instance, Gros and Hefeker (2002) and Benigno (2004) point out that over-and under-representation of member countries in the planner's target function or, equivalently, in the distribution of voting rights within the actual ECB Council, could be optimal if transmission mechanisms di¤er. How important these di¤erences might be is, however, mostly an empirical question.…”

Section: Introductionmentioning

confidence: 99%

How should large and small countries be represented in a currency union?

Berger

Mueller

2007

Public Choice

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The likely extension of the euro area has triggered a debate on the organization of the ECB, in particular on the apparent mismatch between relative economic size and voting rights in the Council. We present a simple model of optimal representation in a federal central bank addressing this question. Optimal voting weights reflect two opposing forces: the wish to insulate common monetary policy from changing preferences at the national level, and the attempt to avoid an overly active or passive reaction to idiosyncratic national economic shocks. A perfect match between economic size and voting rights is rarely optimal, and neither is the "one country, one vote principle". Empirically, there are indications that the pattern of over-and under-representation of member countries in the ECB Council might be extreme by the standards of the US Fed and German Bundesbank and not always optimal. Terms of use: Documents inJEL Code: D72, E52, E58, F33.

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“…Households supply di¤erentiated labor services to all the …rms in their country 4 . Each household enjoys a degree of monopolistic power in setting its wage W t (h).…”

Section: Householdsmentioning

confidence: 99%

“…The …rst term on the left-hand side is the price of a portfolio of statecontingent bonds traded internationally, and D t is the payo¤ of such portfolio in period t. B d t (h) represents household's demand for the riskless one-period 4 The composite labor bundle used in production by any given home …rm is given by…”

Section: Householdsmentioning

confidence: 99%

Welfare Implications of Country Size in a Monetary Union

Mykhaylova

2008

SSRN Journal

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This paper calculates di¤erences in welfare costs of nominal rigidities in large and small EMU countries. I use a two-country DSGE model characterized by optimizing agents, monopolistic wage and price setting, distortionary taxes and government debt dynamics. I …nd that these costs are virtually identical for all members of the EMU, and small countries are not at a disadvantage when it comes to the setting of the common monetary policy. This conclusion is primarily due to highly correlated technological processes in Europe, which cause national and Euro-wide in ‡ations to move together. These …ndings are robust to the asset market structure, trade openness, and di¤erent speci…cations of the Taylor rule.

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Optimal monetary policy in a currency area

Cited by 409 publications

References 21 publications

Dispersão na fixação de preços no Brasil

Dispersão na fixação de preços no Brasil

How should large and small countries be represented in a currency union?

Welfare Implications of Country Size in a Monetary Union

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