Lee, Kang Koo (2009-08). International Monetary Policy Analysis with Durable Goods. Doctoral Dissertation. Thesis uri icon

abstract

  • The dissertation studies a model of an economy which produces and exports durable goods. It analyzes the optimal monetary policy for such a country. Generally, monetary policy has a bigger economic effect on durable goods relative to non-durable goods because durable goods can be stored and households get utility from the stock of durable goods. This dissertation shows that, in Nash equilibrium, the central bank of a durable goods producing country can control changes of the price level with smaller changes in the monetary policy instrument. In the cooperative equilibrium, the monetary authority of the country which imports non-durable goods and exports durable goods should raise the interest rate by more, relative to the Nash case, in response to a rise in foreign inflation. On the other hand, the monetary authority of the country which imports durable goods and exports non-durable goods should raise the interest rate by less than the other country.
  • The dissertation studies a model of an economy which produces and exports
    durable goods. It analyzes the optimal monetary policy for such a country.
    Generally, monetary policy has a bigger economic effect on durable goods relative to
    non-durable goods because durable goods can be stored and households get utility from
    the stock of durable goods. This dissertation shows that, in Nash equilibrium, the central
    bank of a durable goods producing country can control changes of the price level with
    smaller changes in the monetary policy instrument. In the cooperative equilibrium, the
    monetary authority of the country which imports non-durable goods and exports durable
    goods should raise the interest rate by more, relative to the Nash case, in response to a
    rise in foreign inflation. On the other hand, the monetary authority of the country which
    imports durable goods and exports non-durable goods should raise the interest rate by
    less than the other country.

publication date

  • August 2009