Series: IMF Working Papers
Author(s): Zineddine Alla , Raphael Espinoza , and Atish Ghosh
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 29 September 2017
Keywords: Foreign exchange, Central banks and their policies, Central bank reserves; Speculative attack; Portfolio balance model; Equilibrium determinacy; Capital flows; Capital controls; Open Economy New Keynesian Model, Central bank reserves, Speculative attack, Portfolio balance model, Equilibrium determinacy, Capital flows, Capital controls, Open Economy New Keynesian Model
We develop an open economy New Keynesian Model with foreign exchange intervention in the presence of a financial accelerator mechanism. We obtain closed-form solutions for the optimal interest rate policy and FX in...