Notes on the underground: monetary policy in resource-rich economies
The central bank of a commodity‐exporting small open economy faces the traditional trade‐off between domestic inflation and output gap. The commodity sector introduces a terms‐of‐trade inefficiency that gives rise to an endogenous cost‐push shock, changes the target level for output, reduces the slo...
| Main Authors: | , |
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| Format: | Journal article |
| Language: | English |
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Wiley
2018
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| _version_ | 1797083968090144768 |
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| author | Ferrero, A Seneca, M |
| author_facet | Ferrero, A Seneca, M |
| author_sort | Ferrero, A |
| collection | OXFORD |
| description | The central bank of a commodity‐exporting small open economy faces the traditional trade‐off between domestic inflation and output gap. The commodity sector introduces a terms‐of‐trade inefficiency that gives rise to an endogenous cost‐push shock, changes the target level for output, reduces the slope of the Phillips curve, and increases the importance of stabilizing the output gap. Optimal monetary policy calls for a reduction of the interest rate following a drop in the oil price. In contrast, a central bank with a mandate to stabilize consumer price inflation raises interest rates to limit the inflationary impact of an exchange rate depreciation. |
| first_indexed | 2024-03-07T01:49:03Z |
| format | Journal article |
| id | oxford-uuid:9971ac34-b74b-424a-916f-aa2e78b67093 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-07T01:49:03Z |
| publishDate | 2018 |
| publisher | Wiley |
| record_format | dspace |
| spelling | oxford-uuid:9971ac34-b74b-424a-916f-aa2e78b670932022-03-27T00:14:22ZNotes on the underground: monetary policy in resource-rich economiesJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:9971ac34-b74b-424a-916f-aa2e78b67093EnglishSymplectic Elements at OxfordWiley2018Ferrero, ASeneca, MThe central bank of a commodity‐exporting small open economy faces the traditional trade‐off between domestic inflation and output gap. The commodity sector introduces a terms‐of‐trade inefficiency that gives rise to an endogenous cost‐push shock, changes the target level for output, reduces the slope of the Phillips curve, and increases the importance of stabilizing the output gap. Optimal monetary policy calls for a reduction of the interest rate following a drop in the oil price. In contrast, a central bank with a mandate to stabilize consumer price inflation raises interest rates to limit the inflationary impact of an exchange rate depreciation. |
| spellingShingle | Ferrero, A Seneca, M Notes on the underground: monetary policy in resource-rich economies |
| title | Notes on the underground: monetary policy in resource-rich economies |
| title_full | Notes on the underground: monetary policy in resource-rich economies |
| title_fullStr | Notes on the underground: monetary policy in resource-rich economies |
| title_full_unstemmed | Notes on the underground: monetary policy in resource-rich economies |
| title_short | Notes on the underground: monetary policy in resource-rich economies |
| title_sort | notes on the underground monetary policy in resource rich economies |
| work_keys_str_mv | AT ferreroa notesontheundergroundmonetarypolicyinresourcericheconomies AT senecam notesontheundergroundmonetarypolicyinresourcericheconomies |