Exchange Rate Volatility and Welfare Implications in an Open Economy with International Currencies
2011/10/18
研討會日期 : 2011-10-18
時間 : 14:30
主講人 : Professor Masanori Kashiwagi
地點 : Conference Room B110
演講者簡介 : Masanori Kashiwagi received his Ph.D. in Economics from University of California, Los Angeles in 2010. He is currently serving as Assistant Professor of Economics at National Taiwan University. His research field is in macroeconomics and international economics.
演講摘要 : This paper examines optimal monetary policy and its implications for exchange rate behavior and welfare in an open economy where only one country's currency is used for all international transactions. Such a currency is defined as an international currency, and the pricing framework as international currency pricing (ICP). I use a two-country general equilibrium model with monopolistic competition and price rigidities, and introduce nontradable goods as well as tradable goods. By deriving optimal monetary policy rules, I show that the nominal exchange rate fluctuates under ICP. In addition, I consider four possible pricing frameworks, depending on each country's invoicing currency for export. From the optimal policy rules, this paper answers under what conditions each pricing scheme is the optimal response for both countries. For ICP to be the optimal response, the introduction of nontradable goods is crucial.
