Presenter: Edouard Challe. Affiliation: Paris School of Economics. Paper: Inequality and Optimal Monetary Policy in the Open Economy. Date: August 20, 2024. Time: 12:00 GMT (15:00 Israel Time) Abstract: We study optimal monetary policy in a tractable Small Open Economy Heterogeneous-Agent New Keynesian (SOE-HANK) model in which households face uninsured idiosyncratic risk and unequal bond … Read more
Presenter: Wendy A. Morrison Affiliation: Columbia University, Department of Economics. Paper: Optimal Monetary Policy with Redistribution Date: September 26, 2023 Time: 12:00 GMT (15:00 Israel Time) Abstract: We study optimal monetary policy in a dynamic, general equilibrium economy with heterogeneous agents. All heterogeneity is ex-ante: workers differ in type-specific, state-contingent labor productivity, yet markets are … Read more
Introducing heterogeneous households to a New-Keynesian small open economy model amplifies the real income channel of exchange rates: the rise in import prices from a depreciation lowers households’ real incomes, and leads them to cut back on spending. This channel counteracts the standard expenditure-switching channel of exchange rates, and can result in a contractionary effect of a depreciation on domestic output. We study the monetary policy implications of a large and dominant real income channel.