Abstract
(2007) the optimal monetary policy consists in stabilizing consumer prices, as the stabilization of producer prices generates an inadequate adjustment of the real exchange rate. Furthermore, when the intensive margin of trade is factored in, the choice of a fixed exchange-rate regime creates excess macroeconomic volatility that entails a welfare cost when trade flows are significant and when hours worked exhibit high real-wage elasticity.
| Translated title of the contribution | Optimal monetary policy and love-of-variety effect in an open economy |
|---|---|
| Original language | French |
| Pages (from-to) | 43-58 |
| Number of pages | 16 |
| Journal | Economie et Prevision |
| Volume | 193 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 13 Dec 2010 |
| Externally published | Yes |