Resource title

On the Hump-Shaped Output Effect of Monetary Policy in an Open Economy

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Resource description

Results of empirical research have revealed a characteristic hump-shaped effect of monetary policy shocks on output: the effect builds to a peak after several months and then gradually dies out. We analyze, in the context of a "new open economy macroeconomics" model, factors that imply a hump- shaped effect of a monetary policy shock on output. We find that a hump- shaped effect of output is likely to result if the model features a "catching up with the Joneses" effect, pricing-to-market behavior of firms, and imperfect international financial market integration.

Resource author

Christian Pierdzioch, Serkan Yener

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/17764

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Adapt according to the presented license agreement and reference the original author.