Course Description

The course will consist of three main parts. After a brief review of the empirical evidence on the effects of monetary policy, Part 1 will cover models for analysis and evaluation of monetary policy in a closed economy environment. We will discuss the pros and cons of different monetary policy rules. Part 2 will focus on the interdependence of monetary and fiscal policy. Part 3 will extend the analysis of parts 1 and 2 to the open economy.

This course is meant to give you ideas for dissertation research. I will take knowledge of a number of modeling tools that have been covered in the first-year macro sequence as granted.

Course Materials

I will make copies of my lecture notes available. They are mainly based on papers listed below.

Five books provide extensive surveys of several topics we will discuss and/or useful background reading:

    Bernanke, Ben S., Thomas Laubach, Frederic S. Mishkin, and Adam S. Posen, 1999: Inflation Targeting: Lessons from the International Experience, Princeton: Princeton University Press.
    Mankiw, N. Gregory (ed.), 1994: Monetary Policy, Chicago: University of Chicago Press.
    Mark, Nelson C., 2001, International Macroeconomics and Finance: Theory and Econometric Methods, Blackwell Publishers.
    Taylor, John B. (ed.), 1999: Monetary Policy Rules, Chicago: University of Chicago Press.
    Walsh, Carl E., 1998: Monetary Theory and Policy, Cambridge: MIT Press.

The Mark and Taylor books (henceforth, MARK01 and TAYLOR99, respectively) are required. The other three volumes (BetAL99, MANKIW94, and WALSH98, respectively) are strongly recommended (you should already have WALSH98 from the macro sequence).

This syllabus must be used in conjunction with the web page on "Macroeconomic Policy in Closed and Open Economies" that I maintain at http://www2.bc.edu/fabio-ghironi/monesyll.html. That web page contains a comprehensive reading list, with a number of topics and references that I will not have time to cover in class, in addition to more references on the topics I will cover. These are readings that you should do to deepen your knowledge of the field and/or if you plan on working on a specific topic for your own research. The web page contains links to papers, research departments, and people's web pages.

Course Requirements

There are five requirements for this course:

1. You must write four "referee" reports on working papers of your choice. You can choose the papers on which to write your reports among those listed in the web page on "Macroeconomic Policy in Closed and Open Economies" that are highlighted by writing the name of the author(s) in green. You must choose papers from four different sections of the reading list in that page. Reports must show evidence of your having worked carefully through the paper's argument. They must contain your general comments and more specific observations. Do not include lengthy summaries. Due dates for referee reports are as follows:

Wednesday, February 12: Reports 1 and 2.
Wednesday, March 12: Reports 3 and 4.

Note: You cannot recycle reports you wrote for Matteo Iacoviello's Monetary Economics course. Anyone who is caught doing that will automatically fail my course.

2. In addition to the regular lecture meetings, we will schedule a number of extra meetings under the title "Reading (Macro) at Boston College" (R^M@BC). The number of meetings will depend on the number of students in the course. Each meeting will last 1 hour and 30 minutes. The meetings will take place in April. In each of these meetings, we will have two presentations organized as follows. Each student will have to briefly describe the main argument and results of a paper from a list to be announced. (The list will consist of unpublished papers on a topic that is related to those we will cover in class.) After a brief overview of the paper (maximum 10 minutes), the student will have to discuss it for approximately 20 minutes, offering comments as if acting as a discussant in a conference. Every discussion will be followed by a group debate on the paper. (Active participation by students in the debate is part of this requirement for the course. Therefore, all students must read the two papers that are discussed in any given meeting before this takes place.) Each student will be responsible for writing her/his discussion and a summary of the points raised by the audience and for turning in this document within a week of her/his presentation.

3. You must write one short paper. The paper must be between 10 and 15 pages, 1.5 spacing, plus appendix and references. You must discuss your ideas with me before embarking on any of them. The (tentative) due date for the paper is Wednesday, May 14.

4. You must attend the seminars that will take place at Boston College during the semester in which papers in monetary economics and international macroeconomics are presented. Make sure you subscribe to the mailing list for the Macro Seminar and you visit the web page for the Department Seminar regularly.

5. As I announced in October, knowledge of the material covered by Charles Carlstrom in his October lectures is also a requirement of this course.

Incentive Scheme

If I conclude that a referee report that has been submitted in partial satisfaction of Requirement 1 and/or a student discussion for Requirement 2 is of sufficiently high quality, I will ask for the author's permission to send the report/discussion to the author(s) of the paper in question. I will endorse the report/discussion as containing comments that the author(s) of the paper may find useful in revising her/his(their) work. This will give you an early opportunity to have your work recognized outside the BC Economics Department and will give visibility to the quality of what is done here. There will be no consequence if permission to send the report/discussion is denied.

Note: If you choose to write a report on a paper of mine, you will not be penalized if you criticize it--provided your criticisms are sensible.
 

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Reading List

Following  is the list of topics we will cover, along with the papers I will focus on or mention in lecture.

If a paper that is featured in the web page on "Macroeconomic Policy in Closed and Open Economies" has not been included in this syllabus or highlighted as a possible referee report choice, it does not mean that the paper is less important than those that I will cover or have highlighted. I selected only unpublished papers (to my knowledge) for your referee work, there are only so many papers I can cover in lecture, and I may use other scholars' renditions of some articles in the "Macroeconomic Policy in Closed and Open Economies" web page.

The list includes links to downloadable files for a number of papers. You should be able to access several of those published in journals through JSTOR or RePec. You should also be able to access papers published in the Carnegie-Rochester Conference Series on Public Policy, the Journal of Monetary Economics, and the Journal of International Economics from the journals' web sites. (I suggest you browse recent volumes for additional readings that are not listed below.) For some published papers, I included links to working paper versions.

Remember: More references for further reading on each topic (and on related topics I will not have time to cover) can be found in the web page on "Macroeconomic Policy in Closed and Open Economies," along with a set of useful links

Introduction

    Friedman, Milton (1968): "The Role of Monetary Policy," American Economic Review 58: 1-17 (link: JSTOR).
    King, Mervyn (1999): "Challenges for Monetary Policy: New and Old," in New Challenges for Monetary Policy, proceedings of a symposium organized by the Federal Reserve Bank of Kansas City (with John B. Taylor's commentary and the general discussion).
    Walsh, Carl E. (1998): "Empirical Evidence on Money and Output," Chapter 1 in WALSH98.

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Evidence on the Effects of Monetary Policy

    Bernanke, Ben S., and Ilian Mihov (1995): "Measuring Monetary Policy," NBER WP 5145.
    Blanchard, Olivier, and Danny Quah (1989): “The Dynamic Effects of Aggregate Demand and Supply Disturbances,” American Economic Review 79: 655-673.
    Eichenbaum, Martin (1992): "Comments: 'Interpreting the Macroeconomic Time Series Facts: The Effects of Monetary Policy' by Christopher Sims,” European Economic Review 36: 1001-1011.
    Ireland, Peter N. (1999): "A Method for Taking Models to the Data," Boston College Economics Department WP 421.
    Leeper, Eric M., Christopher A. Sims, and Tao Zha (1996): "What Does Monetary Policy Do?" Brookings Papers on Economic Activity 2: 1-63 (with Ben S. Bernanke's discussion, pp. 69-73; link: C.A. Sims' web page).
    Sims, Christopher A. (1972): "Money, Income and Causality," American Economic Review 62: 540-552.
    Sims, Christopher A. (1992): “Interpreting the Macroeconomic Time Series Facts: The Effects of Monetary Policy,” European Economic Review 36: 975-1000.
    Walsh, Carl E. (1998): "Empirical Evidence on Money and Output," Chapter 1 in WALSH98.

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Money and Output: Real Effects of Monetary Policy through Price Stickiness

    Calvo, Guillermo A. (1983): "Staggered Prices in a Utility Maximizing Framework," Journal of Monetary Economics 12: 383-398.
    Chari, V. V., Patrick J. Kehoe, and Ellen R. McGrattan (2000): "Sticky price Models of the Business Cycle: Can the Contract Multiplier Solve the Persistence Problem?" Econometrica 68: 1151-1179 (link: Federal Reserve Bank of Minneapolis Staff Report version).
    Dotsey, Michael, Robert G. King, and Alexander L. Wolman (1999): "State Dependent Pricing and the General Equilibrium Dynamics of Money and Output," Quarterly Journal of Economics 114: 655-690.
    Fuhrer, Jeff, and George Moore (1995): "Inflation Persistence," Quarterly Journal of Economics 110: 127-159.
    Goodfriend, Marvin S., and Robert G. King (1997): "The New Neoclassical Synthesis and the Role of Monetary Policy," in Ben S. Bernanke and Julio J. Rotemberg (eds.), NBER Macroeconomics Annual 1997, Cambridge: MIT Press (with Olivier J. Blanchard's comments; link: Federal Reserve of Richmond WP version).
    Hairault, Jean-Olivier and Franck Portier (1993): "Money, New-Keynesian Macroeconomics and the Business Cycle," European Economic Review 37: 1533-1568.
    Ireland, Peter N. (2001): "Sticky-Price Models of the Business Cycle: Specification and Stability," Journal of Monetary Economics 47: 3-18 (link: BC WP version).
    Nelson, Edward (1998): "Sluggish Inflation and Optimizing Models of the Business Cycle," Journal of Monetary Economics 42: 303-322.
    Rotemberg, Julio J. (1982): "Monopolistic Price Adjustment and Aggregate Output," Review of Economic Studies 49: 517-531.
    Taylor, John B. (1980): "Aggregate Dynamics and Staggered Contracts," Journal of Political Economy 88: 1-24.
    Woodford, Michael (2003): "Optimizing Models with Nominal Rigidities," Chapter 3 in Interest and Prices, forthcoming, Princeton University.
    Yun, Tack (1996): "Nominal Price Rigidity, Money Supply Endogeneity, and Business Cycles," Journal of Monetary Economics 37: 345-370.

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Limited Participation vs. Sticky Prices

    Christiano, Lawrence J., Martin Eichenbaum, and Charles Evans (1997): "Sticky Price and Limited Participation Models of Money: A Comparison," European Economic Review 41: 1201-1249 (link: NBER WP version).
    Papadopoulou, Niki X. (2002): "Sticky Prices, Limited Participation, or Both?" unpublished manuscript, University of Cyprus.

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Time Inconsistency, Rules vs. Discretion

I covered this topic in the macro sequence. I will only review some key concepts in this course. You must be familiar with the results in the following papers:

    Albanesi, Stefania, V. V. Chari, and Lawrence J. Christiano (2000): "Expectation Traps and Monetary Policy" NBER WP 8912.
    Albanesi, Stefania, V. V. Chari, and Lawrence J. Christiano (2001): "How Severe Is the Time Inconsistency Problem in Monetary Policy?" in Hansen, L. P., and S. Turnovsky, Advances in Economic Theory and Econometrics.
    Barro, Robert J., and David B. Gordon (1983a): "A Positive Theory of Monetary Policy in a Natural-Rate Model," Journal of Political Economy 91(4): 589-610 (link: NBER WP version).
    Barro, Robert J., and David B. Gordon (1983b): "Rules, Discretion, and Reputation in a Model of Monetary Policy," Journal of Monetary Economics 12(1): 101-121 (link: NBER WP version).
    Clarida, Richard, Jordi Galí, and Mark Gertler (1999): "The Science of Monetary Policy: A New Keynesian Perspective," Journal of Economic Literature 37: 1661-1707 (link: M. Gertler's web page).
    Ireland, Peter N. (1999): "Does the Time-Consistency Problem Explain the Behavior of Inflation in the United States?" Journal of Monetary Economics 44: 279-291 (link: BC WP version).
    Kydland, Finn E., and Edward C. Prescott (1977): "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy 85(3): 473-491 (link: JSTOR).
    Persson, Torsten, and Guido Tabellini (1993): "Designing Institutions for Monetary Stability," Carnegie-Rochester Conference Series on Public Policy 39.
    Rogoff, Kenneth S. (1985): "The Optimal Degree of Commitment to an Intermediate Monetary Target," Quarterly Journal of Economics 100: 1169-1189 (link: K. S. Rogoff's web page).
    Walsh, Carl E. (1995): "Optimal Contracts for Central Bankers," American Economic Review 85: 150-167.

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Should Central Banks Follow Friedman's Zero Interest Rate Rule?

    Carlstrom, Charles T., and Timothy S. Fuerst (1998): "A Note on the Role of Countercyclical Monetary Policy," Journal of Political Economy 106: 860-866 (link: JSTOR).
    Ireland, Peter N. (1996): "The Role of Countercyclical Monetary Policy," Journal of Political Economy 104: 704-724 (link: JSTOR).

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Interest Rate Rules: Introduction and Some Results

    Taylor, John B. (1993): "Discretion vs. Policy Rules in Practice," Carnegie-Rochester Conference Series on Public Policy 39: 195-214.
    McCallum, Bennett T., and Edward Nelson (1999): "Performance of Operational Policy Rules in an Estimated Semiclassical Structural Model," in TAYLOR99 (with Mark Gertler's comment; link: NBER WP version).
    Woodford, Michael (2003): "The Return of Monetary Rules," Chapter 1 in Interest and Prices, forthcoming, Princeton University.

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Determinacy

Charles Carlstrom covered this topic extensively. As I announced in the Fall, his lectures are considered a part of this course and will be fair game for comp questions I may ask. You definitely must be familiar with the following material:

    Carlstrom, Charles T., and Timothy S. Fuerst (2001): "Timing and Real Indeterminacy in Monetary Models," Journal of Monetary Economics 47: 285-298 (link: Federal Reserve Bank of Cleveland WP version).
    Woodford, Michael (2003): "Price-Level Determination under Interest-Rate Rules," Chapter 2 in Interest and Prices, forthcoming, Princeton University.

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Inflation, Welfare, and Optimal Monetary Policy/Interest Rate Rules

    Giannoni, Marc P., and Michael Woodford (2002): "Optimal Interest-Rate Rules I: General Theory," NBER WP 9419.
    Giannoni, Marc P., and Michael Woodford (2002): "Optimal Interest-Rate Rules I: Applications," NBER WP 9420.
    Rotemberg, Julio J., and Michael Woodford (1999): “Interest Rate Rules in an Estimated Sticky Price Model,” in TAYLOR99 (with Martin Feldstein's comment).
    Woodford, Michael (2003): "Inflation Stabilization and Welfare," Chapter 6 in Interest and Prices, forthcoming, Princeton University (NBER WP 8071, 2001).

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Inflation Targeting

    Svensson, Lars E. O. (1997): "Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets," European Economic Review 41: 1111-1146 (link: NBER WP version).
    Svensson, Lars E. O. (1999): "Inflation Targeting as a Monetary Policy Rule," Journal of Monetary Economics 43: 607-654 (link: NBER WP version).
    Svensson, Lars E. O. (2003): "What Is Wrong with Taylor Rules? Using Judgment in Monetary Policy through Targeting Rules," forthcoming, Journal of Economic Literature.
    Svensson, Lars E. O., and Michael Woodford (1999): "Implementing Optimal Policy Through Inflation Forecast Targeting," unpublished manuscript, IIES and Princeton University.
    Woodford, Michael (2003): "Gains from Commitment to a Policy Rule," Chapter 7 in Interest and Prices, forthcoming, Princeton University

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Liquidity Traps, the Zero Bound: Drawbacks of Interest Rate Rules?

    Benhabib, Jess, Stephanie Schmitt-Grohé, and Martín Uribe (1999): "The Perils of Taylor Rules," Journal of Economic Theory 96: 40-69 (link: M. Uribe's web page).
    Benhabib, Jess, Stephanie Schmitt-Grohé, and Martín Uribe (2000): "Avoiding Liquidity Traps," unpublished manuscript, New York University, Rutgers University, and University of Pennsylvania.
    Benhabib, Jess, Stephanie Schmitt-Grohé, and Martín Uribe (2000): "Chaotic Interest Rate Rules," unpublished manuscript, New York University, Rutgers University, and University of Pennsylvania.

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Evidence on Interest Rate Rules

    Clarida, Richard, Jordi Galí, and Mark Gertler (1998): "Monetary Policy Rules in Practice: Some International Evidence," European Economic Review 42: 1033-1067 (link: M. Gertler's web page).
    Clarida, Richard, Jordi Galí, and Mark Gertler (2000): "Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory," Quarterly Journal of Economics 115: 147-180 (link: M. Gertler's web page).

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Monetary Policy in Multi-Sector Economies

    Aoki, Kosuke (2001): "Optimal Monetary Policy Responses to Relative Price Changes," Journal of Monetary Economics 48: 55-80.
    Benigno, Pierpaolo (1999): "Optimal Monetary Policy in a Currency Area," unpublished manuscript, New York University.
    Carlstrom, Charles T., Timothy S. Fuerst, and Fabio Ghironi (2002): "Does It Matter (for Equilibrium Determinacy) What Price Index the Central Bank Targets?" Working Paper 533, Department of Economics, Boston College.
    Carlstrom, Charles T., Timothy S. Fuerst, and Fabio Ghironi (2003): "Endogenous Persistence in Multi-Sector, Monetary Business Cycle Models," in progress, Federal Reserve Bank of Cleveland, Bowling Green State University, and Boston College.
    Erceg, Christopher, and Andrew T. Levin (2002): "Optimal Monetary Policy with Durable and Non-Durable Goods," Working Paper 179, European Central Bank.

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Fiscal Policy and Inflation: Some Key Results

    Drazen, Allan, and Elhanan Helpman (1990): "Inflationary Consequences of Anticipated Macroeconomic Policies," Review of Economic Studies 57: 147-166.
    Sargent, Thomas J., and Neil Wallace (1981): "Some Unpleasant Monetarist Arithmetic," Federal Reserve Bank of Minneapolis Quarterly Review 5: 1-17.
    Walsh, Carl E. (1998): "Money and Public Finance," Chapter 4 in WALSH98.

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The Fiscal Theory of the Price Level

    Bassetto, Marco (2001): "A Game-Theoretic View of the Fiscal Theory of the Price Level," Federal Reserve Bank of Minneapolis WP 612.
    Buiter, Willem H. (1999): "The Fallacy of the Fiscal Theory of the Price Level," NBER WP 7302.
    Canzoneri, Matthew B., Robert E. Cumby, and Behzad T. Diba (2000): "Is the Price Level Determined by the Need for Fiscal Solvency?" American Economic Review, forthcoming.
    Christiano, Lawrence J., and Terry J. Fitzgerald (2000): "Understanding the Fiscal Theory of the Price Level," unpublished manuscript, Northwestern University.
    Cochrane, John H. (2001): "Long-Term Debt and Optimal Fiscal Policy in the Fiscal Theory of the Price Level," Econometrica 69: 69-116 (link: J. H. Cochrane's web page).
    Woodford, Michael (1997): "Control of the Public Debt: A Requirement for Price Stability," in Calvo, G., and M. King, The Debt Burden and Monetary Policy, London: Macmillan (link: NBER WP version).
    Woodford, Michael (1998): "Public Debt and the Price Level," unpublished manuscript, Princeton University.
    Woodford, Michael (2000): "Fiscal Requirements for Price Stability," Journal of Money, Credit, and Banking, forthcoming.

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Optimal Monetary and Fiscal Policy

    Albanesi, Stefania (2001): "Optimal and Time Consistent Monetary and Fiscal Policy with Heterogeneous Agents," unpublished manuscript, New York University.
    Albanesi, Stefania, and Christopher Sleet (2002): "Optimal Policy with Endogenous Fiscal Constitutions," unpublished manuscript, New York University and University of Iowa.
    Chari, V. V., Lawrence J. Christiano, and Patrick J. Kehoe (1996): "Optimality of the Friedman Rule in Economies with Distorting Taxes," Journal of Monetary Economics 37: 203-223.
    Chari, V.V., and Patrick J. Kehoe (1999): “Optimal Fiscal and Monetary Policy,” in John B. Taylor and Michael Woodford (eds.), Handbook of Macroeconomics, Amsterdam: Elsevier Science.
    Correia, Isabel, and Pedro Teles (1997): "The Optimal Inflation Tax," Federal Reserve Bank of Minneapolis Discussion Paper 123.
    Dixit, Avinash, and Luisa Lambertini (2001): "Fiscal Discretion Destroys Monetary Commitment," unpublished manuscript, Princeton University and UCLA.
    Lucas, Robert E., and Nancy L. Stokey (1983): "Optimal Fiscal and Monetary Policy in an Economy Without Capital," Journal of Monetary Economics 12: 55-93.
    Schmitt-Grohé, Stephanie, and Martín Uribe (2001a): “Optimal Fiscal and Monetary Policy under Imperfect Competition,” unpublished manuscript, Rutgers University and University of Pennsylvania.
    Schmitt-Grohé, Stephanie, and Martín Uribe (2001b): “Optimal Fiscal and Monetary Policy under Sticky Prices,” unpublished manuscript, Rutgers University and University of Pennsylvania.

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The Open Economy Framework

MARK01 is an excellent survey of many topics we will cover in this part of the course as well as of traditional models of exchange rate determination that would belong in an international finance class. You should use MARK01 as your reference book for models and concepts that I will mention often but will not be able to cover in detail along with some models and issues I will focus on.

    Cavallo, Michele, and Fabio Ghironi (2001): "Net Foreign Assets and the Exchange Rate: Redux Revived," Journal of
Monetary Economics 49: 1057-1097 (link: BC WP version).
    Chari, V. V., P. J. Kehoe, and E. R. McGrattan (2002): “Can Sticky Price Models Generate Volatile and Persistent Real Exchange Rates?” Review of Economic Studies 69: 533-563.
    Corsetti, Giancarlo, and Paolo Pesenti (2001): "Welfare and Macroeconomic Interdependence," Quarterly Journal of Economics 116: 421-446 (link: NBER WP version).
    Ghironi, Fabio (2000), "Understanding Macroeconomic Interdependence: Do We Really Need to Shut Off the Current Account?," Boston College Economics Department WP 465.
    Lane, Philip (2001): "The New Open Economy Macroeconomics: A Survey," Journal of International Economics 54: 235-266 (link: P. Lane's web page).
    Obstfeld, Maurice, and Kenneth Rogoff (1995): "Exchange Rate Dynamics Redux," Journal of Political Economy 103: 624-660 (link: JSTOR).
    Obstfeld, Maurice, and Kenneth Rogoff (1998): "Risk and Exchange Rates," NBER WP 6694.
    Obstfeld, Maurice, and Kenneth Rogoff (2000): "New Directions for Stochastic Open Economy Models," Journal of International Economics 50: 117-154 (link: K. Rogoff's web page).
    Tille, Cédric (2000): "The Role of Consumption Substitutability in the International Transmission of Shocks," Journal of International Economics (link: New York Fed Staff Report version).
    Walsh, Carl E. (1998): "Money and the Open Economy," Chapter 6 in WALSH98.

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Macroeconomic Policy in Open Economies: The "Traditional Approach"

    Canzoneri, Matthew B., and Dale W. Henderson (1991): Monetary Policy in Interdependent Economies: A Game-Theoretic Approach, Cambridge: MIT Press.
    Eichengreen, Barry, and Fabio Ghironi (2002): "Transatlantic Trade-Offs in the Age of Balanced Budgets and European Monetary Union," Open Economies Review 13: 381-411.
    Ghironi, Fabio, and Francesco Giavazzi (1998): "Currency Areas, International Monetary Regimes, and the Employment-Inflation Tradeoff," Journal of International Economics 45: 259-296.
    Giavazzi, Francesco, and Marco Pagano (1988): "The Advantage of Tying One's Hands: EMS Discipline and Central Bank Credibility," European Economic Review 32: 1050-1082.

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Monetary Policy Rules in Open Economies and the Choice of the Exchange Rate Regime

    Ball, Laurence (1998): "Policy Rules for Open Economies," in TAYLOR99 (with Thomas Sargent's comment; link: NBER WP version).
    Benigno, Gianluca (1999): "Real Exchange Rate Persistence and Monetary Policy Rules," unpublished manuscript, Bank of England.
    Benigno, Gianluca, and Pierpaolo Benigno (2000): "Price Stability as a Nash Equilibrium in Monetary Open-Economy Models," unpublished manuscript, Bank of England and New York University.
    Benigno, Gianluca, and Pierpaolo Benigno (2000): "Monetary Policy Rules and the Exchange Rate," unpublished manuscript, Bank of England and New York University.
    Benigno, Gianluca, Pierpaolo Benigno, and Fabio Ghironi (2000): "Interest Rates Rules for Fixed Exchange Rate Regimes," Boston College Economics Department WP 468.
    Benigno, Pierpaolo (2001): "Price Stability with Imperfect Financial Integration," unpublished manuscript, New York University.
    Clarida, Richard, Jordi Galí, and Mark Gertler (2001a): "Optimal Monetary Policy in Open vs. Closed Economies: An Integrated Approach," American Economic Review Papers and Proceedings.
    Clarida, Richard, Jordi Galí, and Mark Gertler (2001b): "A Simple Framework for International Monetary Policy Analysis," prepared for the November 2001 Carnegie-Rochester Conference on Public Policy.
    Corsetti, Giancarlo, and Paolo Pesenti (2001): "International Dimension of Optimal Monetary Policy," unpublished manuscript, University of Rome III and Federal Reserve Bank of New York.
    Devereux, Michael, and Charles Engel (1998), "Fixed vs. Floating Exchange Rates: How Price Setting Affects the Optimal Choice of Exchange-Rate Regime," NBER WP 6867.
    Devereux, Michael, and Charles Engel (2000): "Monetary Policy in the Open Economy Revised: Price Setting and Exchange Rate Flexibility," NBER WP 7665.
    Galí, Jordi, and Tommaso Monacelli (1999): "Optimal Monetary Policy and Exchange Rate Variability in a Small Open Economy," unpublished manuscript, Universitat Pompeu Fabra and Boston College.
    Gertler, Mark, Simon Gilchrist and Fabio Massimo Natalucci (2000): "External Constraints on Monetary Policy and the Financial Accelerator," unpublished manuscript, New York University, Boston University, and Board of Governors of the Federal Reserve System.
    Ghironi, Fabio (2000), "Alternative Monetary Rules for a Small Open Economy: The Case of Canada," Boston College Economics Department WP 466.
    Kollmann, Robert (2001): "Monetary Policy Rules in the Open Economy: Effects on Welfare and Business Cycles," prepared for the November 2001 Carnegie-Rochester Conference on Public Policy.
    Leitemo, Kai (1999): "Inflation Targeting Strategies in Small Open Economies," University of Oslo Economics Department WP 21/99.
    McCallum, Bennett T., and Edward Nelson (1999): "Nominal Income Targeting in an Open Economy Optimizing Model," Journal of Monetary Economics 43: 553-578 (link: NBER WP version).
    McCallum, Bennett T., and Edward Nelson (2001): "Monetary Policy for an Open Economy: An Alternative Framework with Optimizing Agents and Sticky Prices," NBER WP 8175.
    Obstfeld, Maurice, and Kenneth Rogoff (2001): "Global Implications of Self-Oriented National Monetary Rules," Quarterly Journal of Economics, forthcoming.
    Smets, Frank, and Raf Wouters (2001): "Openness, Imperfect Exchange Rate Pass-Through and Monetary Policy," prepared for the November 2001 Carnegie-Rochester Conference on Public Policy.
    Svensson, Lars E. O. (2000): "Open-Economy Inflation Targeting,"  Journal of International Economics 50: 155-183.

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Currency Crises

    Krugman, Paul (1979): "A Model of Balance-of-Payments Crises," Journal of Money, Credit, and Banking 11: 311-325 (link: JSTOR).
    Calvo, Guillermo A., and Carlos A. Végh (1999): "Inflation Stabilization and BOP Crises in Developing Countries," in J. B. Taylor and M. Woodford (eds.), Handbook of Macroeconomics, Amsterdam: North-Holland (link: G. A. Calvo's web page).
    Chang, Roberto, and Andrés Velasco (1998): "Financial Crises in Emerging Markets: A Canonical Model," NBER WP 6606.
    Corsetti, Giancarlo, Paolo Pesenti, and Nouriel Roubini (1999): "Paper Tigers? A Model of the Asian Crisis," European Economic Review 43: 1211-1236.
    Obstfeld, Maurice (1994): "The Logic of Currency Crises," Cahiers Economique et Monetairés (Banque de France) 43 (link: M. Obstfeld's web page).
 

Monetary Rules for Emerging Market Economies

    Calvo, Guillermo A. (2001): "Capital Markets and the Exchange Rate, with Special Reference to the Dollarization Debate in Latin America," Journal of Money, Credit and Banking 33: 312-334 (link: G. A. Calvo's web page).
    Céspedes, Luis F., Roberto Chang, and Andrés Velasco (2001): "Balance Sheets and Exchange Rate Policy," unpublished manuscript, International Monetary Fund, Rutgers University, and Harvard University.
    Céspedes, Luis F., Roberto Chang, and Andrés Velasco (2001): "Dollarization of Liabilities, Net Worth Effects and Optimal Monetary Policy," unpublished manuscript, International Monetary Fund, Rutgers University, and Harvard University.
    Devereux, Michael, and Philip Lane (2001): "Exchange Rates and Monetary Policy in Emerging Market Economies," unpublished manuscript, University of British Columbia and Trinity College.
    Ghironi, Fabio, and Alessandro Rebucci (2000): "Monetary Rules for Emerging Market Economies," Boston College Economics Department WP 476.
    Mendoza, Enrique G. (2001): "The Benefits of Dollarization when Stabilization Policy Lacks Credibility and Financial Markets Are Imperfect," Journal of Money, Credit and Banking 33: 440-474 (link: E. G. Mendoza's web page).
    Mishkin, Frederic S. (2000): "Inflation Targeting in Emerging Market Countries," NBER WP 7618.
    Schmitt-Grohé, Stephanie, and Martín Uribe (2001): "Stabilization Policy and the Costs of Dollarization," Journal of Money, Credit and Banking 33: 482-509 (link: M. Uribe's web page).

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