5 Simulating Effects of Coordinated Versus Uncoordinated Policy Rules
Author:
Mr. Jacob A. Frenkel https://isni.org/isni/0000000404811396 International Monetary Fund

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Mr. Morris Goldstein https://isni.org/isni/0000000404811396 International Monetary Fund

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Language:
English
Print Publication Date:
24 Apr 1996
Keywords:
BOOK; exchange rate; nominal interest rate; EC country; deutsche mark; policy rule; exchange-rate crisis; Exchange rates; Real exchange rates; Currencies; Inflation; Global; Europe; Asia and Pacific; North America; Middle East

Abstract

The results of stochastic simulations reported in this paper suggest caution in drawing strong conclusions about the domination of one rule or another for dealing with shocks to an economy. This caution is rooted in observed dynamic instability when monetary policy seeks to control nominal GNP or real exchange rates, in the fact that intuition of certain models does not tell the whole story, in the need to model constraints on the use of policy instruments (particularly fiscal policy), in differences in model specification, and in differences between uncoordinated policy rules and coordinated policy rules.

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Cover Functioning of the International Monetary System
Functioning of the International Monetary System
ISBN:
9781557755544
Publication Date:
24 Apr 1996
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781557755544.071
Pages:
507