Introducing habit formation into an open economy macroeconomic model with price stickiness, we examine the characteristics of an optimal monetary policy. We find that, first, the optimal policy rule entails interest rate smoothing and responds to the lagged values of the foreign interest rate...

Korean Abstract: 본고에서는 통화정책이 정책기조별, 금리수준별, 시기별로 정책여건에따라 자본유출입에 미치는 영향의 정도가 다른지 여부에 대해 점검해 보았다. 자본이동에 대한 행태방정식을 대상으로 분석한 결과...

This paper sets up a canonical new Keynesian small open economy model with nominal price rigidities to explore the impact of habit persistence and exchange rate pass-through on the welfare ranking of alternative monetary policy rules. It identifies three factors that can affect the welfare...