| Title: | Identifying Monetary Policy in a Small Open Economy under Flexible Exchange Rates |
| Author: | Cushman, David O.; Zha, Tao |
| Author Affiliation: | U Saskatchewan; Federal Reserve Bank of Atlanta |
| Source: | Journal of Monetary Economics, August 1997, v. 39, iss. 3, pp. 433-48 |
| Publication Date: | August 1997 |
| Abstract: | Previous empirical study on the effects of monetary policy shocks in small open economies has generated puzzling dynamic responses in various macroeconomic variables. This paper argues that these puzzles derive from an identification of monetary policy that is inappropriate for such economies. To remedy this, it is proposed that a structural model be estimated to explicitly account for the features of the small open economy. Such a model is applied to Canada with tightly estimated results overall. The dynamic responses to the identified monetary policy shock are consistent with standard theory and highlight the exchange rate as a transmission mechanism. |
| Descriptors: | Domestic Monetary Theory; Empirical Studies Illustrating Theory International Monetary Arrangements Monetary Growth Models Open Economy Macroeconomic Theory--Balance of Payments and Adjustment Mechanisms Monetary Policy (Targets, Instruments, and Effects) International Monetary Arrangements and Institutions Open Economy Macroeconomics |
| Geographic Descriptors: | Canada |
| ISSN: | 03043923 |
| Publication Type: | Journal Article |
| Availability: | http://www.elsevier.com/homepage/sae/econbase/monec/ |