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dc.contributor.authorCoulibaly, Louphou
dc.date.accessioned2018-06-26T20:13:30Z
dc.date.available2018-06-26T20:13:30Z
dc.date.issued2018-06
dc.identifier.urihttp://hdl.handle.net/1866/20649
dc.publisherUniversité de Montréal. Département de sciences économiques.fr
dc.subjectFinancial crisesfr
dc.subjectMonetary policyfr
dc.subjectCapital controlsfr
dc.subjectTime consistencyfr
dc.subjectAggregate demand externalityfr
dc.subjectPecuniary externalityfr
dc.titleMonetary policy in sudden stop-prone economiesfr
dc.typeArticlefr
dcterms.abstractIn a model featuring sudden stops and pecuniary externalities, I show that the ability to use capital controls has radical implications for the conduct of monetary policy. Absent capital controls, following an inflation targeting regime is nearly optimal. However, if the central bank lacks commitment, it will follow a monetary policy that is excessively procyclical and not desirable from an ex ante welfare prospective: it increases overall indebtedness as well as the frequency of financial crisis and reduces social welfare relative to an inflation targeting regime. Access to capital controls can correct this monetary policy bias. With capital controls, relative to an inflation targeting regime, the time-consistent regime reduces both the frequency and magnitude of crises, and increases social welfare. This paper rationalizes the procyclicality of the monetary policy observed in many emerging market economies.fr
dcterms.isPartOfurn:ISSN:0709-9231
dcterms.languageengfr
UdeM.VersionRioxxVersion publiée / Version of Recordfr


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