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Excess Capacity, Monopolistic Competition, and International Transmission of Monetary Disturbances / Lars E.O. Svensson, Sweder van Wijnbergen.
- Format:
- Book
- Author/Creator:
- Svensson, Lars E.O.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w2262.
- NBER working paper series no. w2262
- Language:
- English
- Subjects (All):
- International economic relations.
- Monetary policy.
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1987.
- Cambridge, Massachusetts : National Bureau of Economic Research, 1987.
- Summary:
- A stochastic two-country neoclassical rational expectations model with sticky prices -- optimally set by monopolistically competitive firms -- and possible excess capacity is developed to examine international spillover effects on output of monetary disturbances. The Mundell-Fleming model predicts that monetary expansion at home leads to recession abroad. In contrast, our main result is that spillover effects of monetary policy may be either positive or negative, depending upon whether the intertemporal elasticity of substitution in consumption exceeds the intratemporal elasticity of substitution. The model in addition is used to determine nominal and real interest rates, exchange rates, and other asset prices.
- Notes:
- Print version record
- May 1987.
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