TY  - UNPD
A1  - Cwik, Tobias J.
A1  - Müller, Gernot J.
A1  - Wolters, Maik Hendrik
T1  - Does trade integration alter monetary policy transmission?
T2  - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2008,29
N2  - This paper explores the role of trade integration—or openness—for monetary policy transmission in a medium-scale New Keynesian model. Allowing for strategic complementarities in price-setting, we highlight a new dimension of the exchange rate channel by which monetary policy directly impacts domestic inflation. Although the strength of this effect increases with economic openness, it also requires that import prices respond to exchange rate changes. In this case domestic producers find it optimal to adjust their prices to exchange rate changes which alter the domestic currency price of their foreign competitors. We pin down key parameters of the model by matching impulse responses obtained from a vector autoregression on U.S. time series relative to an aggregate of industrialized countries. While we find evidence for strong complementarities, exchange rate pass-through is limited. Openness has therefore little bearing on monetary transmission in the estimated model.
T3  - CFS working paper series - 2008, 29 
KW  - Monetary Policy Transmission
KW  - Open Economy
KW  - Trade Integration
KW  - Exchange Rate Channel
KW  - Strategic Complementarity
KW  - Exchange Rate Pass-Through
KW  - USA
KW  - Geldpolitik
KW  - Wechselkurs
KW  - Außenhandel
KW  - Neokeynesianismus
Y1  - 2008
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/5829
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30-57676
ER  -