Code for: Monetary Policy in Sudden Stop-prone Economies
Principal Investigator(s): View help for Principal Investigator(s) Louphou Coulibaly, Federal Reserve Bank of Minneapolis, University of Wisconsin-Madison and NBER
Version: View help for Version V1
| Name | File Type | Size | Last Modified |
|---|---|---|---|
| Replication Code | 09/13/2023 04:39:PM |
Project Citation:
Coulibaly, Louphou. Code for: Monetary Policy in Sudden Stop-prone Economies. Nashville, TN: American Economic Association [publisher], 2023. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2023-09-26. https://doi.org/10.3886/E173141V1
Project Description
Summary:
View help for Summary
This paper proposes a parsimonious theory explaining the cyclicality of monetary policy in emerging countries in a model where access to foreign financing depends on the real exchange rate and the government lacks commitment. The discretionary monetary policy is procyclical to mitigate balance sheet effects originating from exchange rate depreciations during sudden stops. Committing to an inflation targeting regime is found to increase social welfare and reduce the frequency of financial crises, despite increasing their severity. Finally, the ability to use capital controls induces a less procyclical discretionary monetary policy and delivers higher welfare gains than an inflation targeting regime.
Scope of Project
Subject Terms:
View help for Subject Terms
Financial crises;
monetary policy;
time-consistency;
nominal rigidities;
externalities;
sudden stops;
fear of floating;
capital controls
JEL Classification:
View help for JEL Classification
E44 Financial Markets and the Macroeconomy
E52 Monetary Policy
F38 International Financial Policy: Financial Transactions Tax; Capital Controls
F41 Open Economy Macroeconomics
G01 Financial Crises
E44 Financial Markets and the Macroeconomy
E52 Monetary Policy
F38 International Financial Policy: Financial Transactions Tax; Capital Controls
F41 Open Economy Macroeconomics
G01 Financial Crises
Related Publications
Published Versions
Report a Problem
Found a serious problem with the data, such as disclosure risk or copyrighted content? Let us know.
This material is distributed exactly as it arrived from the data depositor. ICPSR has not checked or processed this material. Users should consult the investigator(s) if further information is desired.