financial crises, monetary policy rules, emerging markets, liability dollarization, bounded rational

Publication date: 29 Apr 2006 | Publication type: NIESR Discussion Paper | NIESR discussion paper number: 272
This paper extends a standard open-economy New Keynesian model to examine the efficiency of alternative monetary policy rules (both fixed and nonlinear) during a period of financial crisis. A third-generation 'balance sheet effect' is made operational through an endogenous risk premium...