TY  - UNPD
A1  - Faia, Ester
A1  - Monacelli, Tommaso
T1  - Ramsey monetary policy and international relative prices
T2  - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2004,04
N2  - We analyze welfare maximizing monetary policy in a dynamic two-country model with price stickiness and imperfect competition. In this context, a typical terms of trade externality affects policy interaction between independent monetary authorities. Unlike the existing literature, we remain consistent to a public finance approach by an explicit consideration of all the distortions that are relevant to the Ramsey planner. This strategy entails two main advantages. First, it allows an accurate characterization of optimal policy in an economy that evolves around a steady-state which is not necessarily efficient. Second, it allows to describe a full range of alternative dynamic equilibria when price setters in both countries are completely forward-looking and households' preferences are not restricted. In this context, we study optimal policy both in the long-run and along a dynamic path, and we compare optimal commitment policy under Nash competition and under cooperation. By deriving a second order accurate solution to the policy functions, we also characterize the welfare gains from international policy cooperation. Klassifikation: E52, F41 . This version: January, 2004. First draft: October 2003 .
T3  - CFS working paper series - 2004, 04 
KW  - Optimal Monetary Policy
KW  - Ramsey planner
KW  - Nash equilibrium
KW  - Cooperation
KW  - sticky prices
KW  - imperfect competition
KW  - Geldpolitik
Y1  - 2004
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/4440
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30-10567
N1  - This version: January, 2004. First draft: October 2003 .
IS  - Version: January, 2004
ER  -