Monetary Policies in Interdependent Economies: An Open Economy Explanation for Base Drift and Price-Level Non-Trend-Stationarities

Authors

Joseph Daniels, Marquette UniversityFollow
David D. VanHoose, University of Alabama - TuscaloosaFollow

Document Type

Article

Language

eng

Format of Original

13 p.

Publication Date

4-1995

Publisher

Elsevier

Source Publication

Journal of International Money and Finance

Source ISSN

0261-5607

Abstract

Most nations have experienced 'base drift' of their money stocks and associated price-level non-trend-stationarities. Recent explanations for this fact have emphasized tensions among various possible objectives of central banks in closed-economy or small-open-economy frameworks. In contrast, this paper explores structural and policy interdependence among economies as an explanation for price-level non-trend-stationarities. It demonstrates that such interdependence can induce central banks to follow non-trend-stationary policies even if they desire only to smooth prices in their home economies.

Comments

Accepted version. Journal of International Money and Finance, Vol. 14, No. 2 (April 1995): 275-287. DOI. Published under Creative Commons license Attribution-NonCommercial-NoDerivatives 4.0 International.

Recommended Citation

Daniels, Joseph and VanHoose, David D., "Monetary Policies in Interdependent Economies: An Open Economy Explanation for Base Drift and Price-Level Non-Trend-Stationarities" (1995). Economics Faculty Research and Publications. 16.
https://epublications.marquette.edu/econ_fac/16