Soffritti, Mirco; Zanetti, Francesco - In: International Journal of Finance & Economics 13 (2008) 2, pp. 135-149
Fixing the exchange rate is often seen as an appealing strategy to gain credibility and keep inflation under control. But what is the impact of this policy on welfare? We answer this question using a microfounded, New Keynesian monetary model for a small open economy, to study the outcome of...