Interest Rate Targeting in a Small Open Economy: The Predetermined Exchange Rates Case

1990 ◽  
Author(s):  
Carlos Végh
Keyword(s):  
Interest Rate ◽  
Exchange Rates ◽  
Open Economy ◽  
Small Open Economy

scholarly journals On the bifurcation of a torus in a small open economy model

2011 ◽  
Vol 48 (1) ◽  
pp. 125-134
Author(s):  
Katarína Makovínyiová ◽  
Rudolf Zimka
Keyword(s):  
Interest Rate ◽  
Exchange Rates ◽  
Open Economy ◽  
Invariant Torus ◽  
Small Open Economy ◽  
Sufficient Conditions ◽  
National Income ◽  
Macroeconomic Model ◽  
Money Stock ◽  
Economy Model

Abstract A four-dimensional macroeconomic model of a small open economy under fixed exchange rates is investigated. The model describes the development of national income, capital stock, interest rate and money stock. Sufficient conditions for the existence of an invariant torus are given. A numerical example illustrating the gained results is presented.

On the bifurcation of limit cycles in a dynamic model of a small open economy

2013 ◽  
Vol 24 (3) ◽  
pp. 455-470 ◽  
Author(s):  
KATARÍNA MAKOVÍNYIOVÁ ◽  
RUDOLF ZIMKA
Keyword(s):  
Interest Rate ◽  
Exchange Rates ◽  
Open Economy ◽  
Limit Cycles ◽  
Capital Stock ◽  
Small Open Economy ◽  
Sufficient Conditions ◽  
Macroeconomic Model ◽  
Money Stock ◽  
Bifurcation Of Limit Cycles

In this paper a four-dimensional macroeconomic model of a small open economy, describing the development of income, capital stock, interest rate and money stock, which was constructed in [5] (Makovínyiová, K. & Zimka, R. (2009) On stability in generalized Schinasi's macroeconomic model under fixed exchange rates. Tatra Mt. Math. Publ. 43, 115–122), is analysed. Sufficient conditions for the existence of one pair of purely imaginary eigenvalues and two eigenvalues with negative real parts in the linear approximation matrix of the model are found. Formulae for the calculation of the bifurcation coefficients of the model are derived. A statement about the existence of limit cycles is made. A numerical example is given illustrating the results.

Interest Rate Targeting in a Small Open Economy: The Predetermined Exchange Rates Case

1990 ◽  
Vol 90 (21) ◽  
pp. 1 ◽  
Author(s):  
Guillermo Calvo ◽  
Carlos A. Végh Gramont ◽  
◽  
Keyword(s):  
Interest Rate ◽  
Exchange Rates ◽  
Open Economy ◽  
Small Open Economy

Interest Rate–Economic Growth Nexus Under Currency Board Operations

2021 ◽  
Vol 8 (1) ◽  
pp. 13-24
Author(s):  
Martinianus Tshimologo Tibinyane ◽  
Teresia Kaulihowa
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
Impulse Response ◽  
Response Function ◽  
Open Economy ◽  
Small Open Economy ◽  
Impulse Response Function ◽  
Policy Instrument ◽  
Variance Decomposition ◽  
Currency Board

This paper analyses the effect of the prime interest rate as a monetary policy instrument to stimulate economic growth in Namibia, a small open economy that is constrained by currency board operations. A Vector Autoregressive Model (VAR) was used for the period 1980–2019. The result shows that Namibia’s prime interest rate has no significant effect on economic growth. This finding remains robust and consistent when impulse response function and variance decomposition are employed. The impulse response function indicates a shock on the prime interest rate exhibits an inverse relationship. However, this effect is insignificant in both short and long-run scenarios. The variance decomposition indicates that the prime interest rate has a strongly exogenous impact, implying it has a weak influence on GDP growth. Policy implication indicates that small open economies under currency board operations need to identify different policy responses to circumvent external shocks and addresses their development needs.

Exchange rates and import prices for a small open economy: the case of Ireland

1998 ◽  
Vol 30 (9) ◽  
pp. 1147-1155 ◽  
Author(s):  
Geoff Kenny ◽  
Donal Mcgettigan
Keyword(s):  
Exchange Rates ◽  
Open Economy ◽  
Small Open Economy ◽  
Import Prices

scholarly journals TECHNOLOGY SHOCKS AND BUSINESS CYCLES IN INDIA

2017 ◽  
Vol 23 (5) ◽  
pp. 1721-1756 ◽  
Author(s):  
Shesadri Banerjee ◽  
Parantap Basu
Keyword(s):  
Interest Rate ◽  
Open Economy ◽  
Emerging Market ◽  
Small Open Economy ◽  
Annual Data ◽  
Technology Shocks ◽  
Demand Side ◽  
Aggregate Fluctuations ◽  
Dsge Model ◽  
Dynamic Stochastic

In this paper, we develop a small open economy New Keynesian dynamic stochastic general equilibrium (DSGE) model to understand the relative importance of two key technology shocks, Hicks neutral total factor productivity (TFP) shock and investment specific technology (IST) shock for an emerging market economy like India. In addition to these two shocks, our model includes three demand side shocks such as fiscal spending, home interest rate, and foreign interest rate. Using a Bayesian approach, we estimate our DSGE model with Indian annual data for key macroeconomic variables over the period of 1971–2010, and for subsamples of pre-liberalization (1971–1990) and post-liberalization (1991–2010) periods. Our study reveals three main results. First, output correlates positively with TFP, but negatively with IST. Second, TFP and IST shocks are the first and the second most important contributors to aggregate fluctuations in India. In contrast, the demand side disturbances play a limited role. Third, although TFP plays a major role in determining aggregate fluctuations, its importance vis-à-vis IST has declined during the post liberalization era. We find that structural shifts of nominal friction and relative home bias for consumption to investment in the post-liberalization period can account for the rising importance of the IST shocks in India.

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