IDEAS home Printed from https://ideas.repec.org/a/eee/jmacro/v14y1992i3p449-466.html
   My bibliography  Save this article

Optimal monetary policy with an interest-equalization tax in a two-country macroeconomic model

Author

Listed:
  • Benavie, Arthur
  • Froyen, Richard

Abstract

This paper examines the coordination of monetary policy and an interest-equalization tax stabilizer within a two-country macroeconomic model. Within this two-country framework, which allows for wage indexation and includes an imported intermediate good, monetary policy is shown to be severely constrained by the uncovered interest parity condition implied by perfect capital mobility. Introduction of an interest-equalization tax stabilizer into the model significantly enhances policy makers' ability to stabilize output (or price) in the two countries.

Suggested Citation

  • Benavie, Arthur & Froyen, Richard, 1992. "Optimal monetary policy with an interest-equalization tax in a two-country macroeconomic model," Journal of Macroeconomics, Elsevier, vol. 14(3), pages 449-466.
    • Handle: RePEc:eee:jmacro:v:14:y:1992:i:3:p:449-466
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0164-0704(06)80004-2
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Richard T. Froyen & Alfred V. Guender, 2022. "The Mundellian Trilemma and Optimal Monetary Policy in a World of High Capital Mobility," Open Economies Review, Springer, vol. 33(4), pages 631-656, September.
    2. Jang-Yung Lee, 1996. "Implications of a Surge in Capital Inflows: Available tools and Consequences for the Conduct of Monetary Policy," IMF Working Papers 1996/053, International Monetary Fund.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jmacro:v:14:y:1992:i:3:p:449-466. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622617 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.