This paper proposes a channel through which increased openness to international trade can increase a country’s long-run incentive to create inflation. The theoretical justification for this channel is the well known “beggar thy neighbor” incentive, and its dominance relies on a monetary...

This paper proposes a channel through which increased openness to international trade can increase a country's long-run incentive to create inflation. The theoretical justifcation for this channel is the well known "beggar thy neighbor" incentive, and its dominance relies on a monetary...

This paper defines a monetary equilibrium and computes an optimal nonlinear, full-information, state-dependent monetary policy rule to which the monetary authority commits at the beginning of time. This type of optimal monetary policy represents a combination of the flexibility of discretion...