554 International Monetary Theory and Policy II, Spring 2005

Economics 554, Spring 2005

Princeton University

Courses 2004-05: 200 504 554 581c | Blackboard | Calendars | Students

International Monetary Theory and Policy II

This is a second-year one-semester graduate course in the Spring 2005 Graduate Program, Department of Economics, Princeton University.

Announcements regarding the course will be made on this page, and the page will be frequently updated. (Course plan and readings are preliminary and will be updated until the end of classes.) Students are required to check the page regularly.

Teacher: Lars Svensson, Office: 106 Fisher Hall, Tel: 258-0329, Email: svensson@princeton.edu.
Office hours: By appointment.
Administrative assistant: Kathleen Hurley, Office: 107 Fisher Hall, Tel: 258 4023, Email: kahurley@princeton.edu.

Second-year students 2004-05

Class schedule: Tue, 2:40-5:40 pm, B-03 Fisher.
Course starts Feb 1, ends Apr 26, 2005.

Final exam for 554 and general exam for International Money and Finance (553 and 554): Wed May 11, 1-4pm, B-06 Fisher.

Prerequisites: Students are expected to be familiar with the material in Economics 553, International Monetary Theory and Policy I.

Topics

A framework for analysis of monetary policy
The evolution of monetary policy in open economies
Monetary policy issues for the Eurosystem
Recent New Classical open-economy models of monetary policy and the transmission mechanism
Recent New Keynesian open-economy models of monetary policy and the transmission mechanism
The choice of monetary-policy/exchange-rate regime
The zero bound, liquidity traps and deflation in open economies
The US current account and the dollar

Slides: Copies of slides or notes will be available before each class on this page, as pdf files. Students are expected to download and print these before each class.

Notice: These slides are not self-contained but incomplete. They are not a substitute for coming to class. In particular, the slides are simplified and sometimes provocative. They should therefore not be interpreted as definitive statements. The slides should never be quoted without my permission.

Lecture notes 1: A framework for monetary policy analysis
"Optimization under Commitment and Discretion, the Recursive Saddlepoint Method, and Targeting Rules and Instrument Rules: Lecture Notes."
Lecture notes 2
Lecture notes 3
Gali 01 Fig 3
Lecture notes 4 Revised 2/20/05
Lecture notes 5
Lecture notes 6
Lecture notes 7
Lecture notes 8
Lecture notes 9 Revised 4/26/05

Readings and course plan

* indicates required reading. Other readings are suggested but not required.

Students are expected to find most of the readings on the web. Use links to authors' personal homepages (this usually gives you the most recent copy), central bank's publications and working papers, NBER working papers, CEPR discussion papers, journals, JSTOR, the PU Library e-journals, etc. Some restricted material is available here.

See also the following webpages:
Benigno, Benigno and Ghironi's Monetary Policy Rules in Open Economies
Corsetti's Euro Homepage
Doyle's New Open Economy Macroeconomics Homepage
Roubini's Global Macroeconomics and Financial Policy Site

1. A framework for analyzing monetary policy

Cecchetti (1998)
Clarida, Gali and Gertler (1999)
Söderlind (1999)
*Svensson (2000b, 2001a, 2005b)
Svensson (2005a, appendix)
Svensson and Woodford (2003)

2. The evolution of monetary policy rules

Bernanke (2004)
Cecchetti (1998)
Cecchetti and Kim (2003)
Clarida, Gali and Gertler (1999)
Giannoni and Woodford (2002).
McCallum (1999)
*Meltzer (n.d.)
Nelson (2003)
*Svensson (2001a, 2003b)
Svensson (2005a)
Svensson and Woodford (2003)
*Taylor (1993)
Truman (2003)
Vestin (2003)
Wicksell (1898)
Woodford (1998)

3. Monetary-policy issues for the Eurosystem

Begg, De Grauwe, Giavazzi, Uhlig and Wyplosz (1998)
Bofinger (1999)
Buiter (1999)
Calmfors, Corsetti, Flemming, Honkapohja, Kay, Leibfritz, Saint-Paul, Sinn and Vives (2003)
Corsetti's Euro Homepage
Crooks and Major (2003)
European Central Bank (1999)
*European Central Bank (2004, chap. 3: The ECB's monetary policy strategy)
European Parliament's Dialogue with the ECB
*Gali (2001)
Gali, Jordi, Stefan Gerlach, Julio Rotemberg, Harald Uhlig, and Michael Woodford (2004)
Gerlach and Svensson (2003)
Nelson (2003)
Issing (1999)
Rudebusch and Svensson (2002)
*Svensson (2000a, 2003c )

4. Recent New Classical open-economy models of monetary policy and the transmission mechanism

Bacchetta and van Wincoop (2002)
Canzoneri, Cumby and Diba (2002)
Chari, Kehoe and McGrattan (1998)
Cole and Obstfeld (1991)
*Corsetti and Pesenti (2004a)
*Corsetti and Pesenti (2004b)
Dornbusch (1980)
Devereux and Engel (2002)
Engel (2002)
Friberg (1998)
Krugman (2001)
*Lane (2001)
*Obstfeld and Rogoff (1996, sec. 9.2, 10.1, 10.2)
Obstfeld and Rogoff (2000)
Obstfeld and Rogoff (2002)
Sutherland (2000)
Svensson and van Wijnbergen (1989)

5. Recent New Keynesian open-economy models of monetary policy and the transmission mechanism

Ball (1999)
Batini and Haldane (1999)
*Benigno and Benigno (2004)
Chari, Kehoe and McGrattan (2000)
*Clarida, Gali and Gertler (2002)
Flamini (2004)
Gali and Monacelli (2002)
Kollman (2001)
McCallum and Nelson (1999, 2000)
*Nelson (2002)
*Schmitt-Grohe, Stephanie, and Martin Uribe (2001)
*Smets and Wouters (2001)
Svensson (2000b)
Weerapana (2000)

6. The choice of monetary-policy/exchange-rate regime

*Calvo and Reinhart (2000)
Cavallo, Kisselev, Perri and Roubini (2002)
Céspedes, Chang and Velasco (2002)
*Fischer (2001)
*Frankel (1999)
Mishkin and Savastano (1999)
Obstfeld and Rogoff (1995)
Reinhart and Rogoff (2002)
Svensson (1997a)

7. The zero bound, liquidity traps and deflation in open economies

Ahearne, et al. (2002)
Auerbach and Obstfeld (2003)
Benhabib, Schmitt-Grohe and Uribe (2002)
*Bernanke (2000)
*Bernanke (2002)
Bernanke (2003)
Buiter and Panigirtzoglou (1999)
Clouse, Henderson, Orphanides, Small and Tinsley (2000)
*Coenen, Günter, and Volker Wieland (2003, revised)
Eggertsson (2003)
Eggertsson and Woodford (2003)
Goodfriend (2000)
Ito and Mishkin (2004)
*Jeanne and Svensson (2004)
Krugman (1998)
*McCallum (2002)
McCallum (2005)
McKinnon, Ronald, and Gunther Schnabl (2002)
Meltzer (1999)
Orphanides and Wieland (1999)
Posen (1998)
Reifschneider and Williams (2000)
*Svensson (2001b, Appendix 1)
*Svensson (2003a)
*Svensson (04)
*Ueda (2000)
Woodford (2003, chap. 2, sec. 4.2)

8. The US current account and the dollar

*Bernanke (2005).
*Blanchard, Giavazzi, and Sa (2005).
*Blanchard, Giavazzi, and Sa (2005b).
Branson and Henderson (1985).
Dooley and Garber (2005).
Edwards (2005).
Gourinchas and Rey (2004)
Henderson and Rogoff (1982)
Kouri (1976, 1983).
Lane and Milesi-Ferretti (2004).
*Obstfeld (2004).
Obstfeld (2004b).
Obstfeld and Rogoff (2000b).
*Obstfeld and Rogoff (2004).
*Obstfeld and Rogoff (2005).
Roubini and Setser (2004).
Tille (2004).
Ventura (2003).

References

Ahearne, Alan, Joseph Gagnon, Jane Haltmaier, Steve Kamin, Christopher Erceg, Jon Faust,
Luca Guerrieri, Carter Hemphill, Linda Kole, Jennifer Roush, John Rogers, Nathan Sheets
and Jonathan Wright (2002), “Preventing Deflation: Lessons from Japan’s Experience in the
1990s,” International Finance Discussion Paper No. 729, Federal Reserve Board.
Angeloni, Ignazio, Vitor Gaspar and Oreste Tristani (1999), "The Monetary Policy Strategy of the ECB," working paper, ECB.
Auerbach, Alan J., and Maurice Obstfeld (2003), "The Case for Open-Market Purchases in a Liquidity Trap," working paper, University of California, Berkeley. Comments by Lars Svensson.
Bacchetta, Philippe, and Eric van Wincoop (2002), "A Theory of Currency Denomination of International Trade," Journal of International Economics, forthcoming.
Ball, Larry (1999), "Policy Rules for Open Economies," in Taylor (1999).
Ball, Laurence, and Niamh Sheridan (2005), "Does Inflation Targeting Matter?" in Bernanke and Woodford, eds. (2005) 249-276.
Batini, Nicoletta, and Andrew Haldane (1999), "Forward-Looking Rules for Monetary Policy," in Taylor (1999)
Begg, David, Paul De Grauwe, Francesco Giavazzi, Harald Uhlig, and Charles Wyplosz (1998), The ECB: Safe at any Speed?, Monitoring the European Central Bank 1, CEPR, London.
Benhabib, Jess, Stephanie Schmitt-Grohe and Martin Uribe (2002), "Avoiding Liquidity Traps," Journal of Political Economy 110, 535-563.
Benigno, Pierpaolo (1999), "Optimal Monetary Policy in a Currency Area," working paper, Princeton University.
Benigno, Gianluca, and Pierpaolo Benigno (2004), "Designating Targeting Rules for International Monetary Policy Cooperation," working paper.
Berg, Claes, and Lars Jonung (1999), "Pioneering Price Level Targeting: The Swedish Experience 1931-1937," Journal of Monetary Economics 43, 525-551.
Bernanke, Ben S. (2000), "Japanese Monetary Policy: A Case of Self-Induced Paralysis?" in Adam Posen and Ryoichi Mikitani, eds., Japan's Financial Crisis and Its Parallels to US Experience, Special Report 13, Institute for International Economics, Washington, DC, 149-166. .
Bernanke, Ben S. (2002), "Deflation: Making Sure `It' Doesn't Happen Here," speech on November 21, Federal Reserve Board.
Bernanke, Ben S. (2003), "Some Thoughts on Monetary Policy in Japan," speech on May 31, Federal Reserve Board.
Bernanke, Ben S. (2004), "The Logic of Monetary Policy," speech in Washington, DC, December 2, Federal Reserve Board.
Bernanke, Ben S. (2005), "The Global Saving Glut and the U.S. Current Account," speech in Richmond, VA, on March 10, Federal Reserve Board
Bernanke, Ben S., and Mark Gertler (1999), "Monetary Policy and Asset Price Volatility," in New Challenges for Monetary Policy: A Symposium Sponsored by the Federal Reserve Bank of Kansas City, Federal Reserve Bank of Kansas City.
Bernanke, Ben, and Mark Gertler (2001), "Should Central Banks Respond to Movements in Asset Prices?" American Economic Review, May.
Bernanke, Ben, Mark Gertler and Simon Gilchrist (1998), "The Financial Accelerator in a Quantitative Business Cycle Framework," NBER Working Paper No. 6455.
Bernanke, Ben S., Thomas Laubach, Frederic Mishkin and Adam Posen (1999), Inflation Targeting: Lessons from the International Experience, Princeton: Princeton Univ. Press.
Bernanke, Ben S., and Ilian Mihov (1998), "Measuring Monetary Policy," Quarterly Journal of Economics 113, 869-902.
Bernanke, Ben S., and Frederic S. Mishkin (1997), "Inflation Targeting: A New Framework for Monetary Policy?" Journal of Economic Perspectives 11, 97-116.
Bernanke, Ben S., and Michael Woodford, eds. (2005), The Inflation-Targeting Debate, University of Chicago Press.
Blanchard, Olivier, Francesco Giavazzi, and Filipa Sa (2005), "The U.S. Current Account and the Dollar," NBER WP No. 11137, /www.nber.org/papers/w11137.
Blanchard, Olivier, Francesco Giavazzi, Filipa Sa (2005b), "The U.S. Current Account, the Dollar, the Euro, and the Yen," working paper, April 19 revision.
Blinder, Alan S. (1998), Central Banking in Theory and Practice, MIT Press.
Bofinger, Peter (1999), "The Conduct of Monetary Policy by the European Central Bank According to Article 105 of the Treaty versus the Real Economy," working paper, University of Würzburg.
Branson, William H., and Dale W. Henderson (1985), "The Specification and Influence of Asset Markets," in Jones, Ronald W., and Peter B. Kenen, eds., Handbook in International Economics, Vol. III, North-Holland, 749-805.
Brookings Panel on Economic Activity, March 31-April1, 2005.
Buiter, Willem H. (1999), "Alice in Euroland," CEPR Policy Paper No. 1.
Buiter, Willem H., and Nikolas Panigirtzoglou (1999), "Liquidity Traps: How to Avoid Them and How to Escape Them," NBER Working Paper No. 7245.
Calmfors, Lars, Giancarlo Corsetti, John Flemming, Seppo Honkapohja, John Kay, Willi Leibfritz, Gilles Saint-Paul, Hans-Werner Sinn and Xavier Vives (2003), Report on the European Economy 2003, European Economic Advisory Group at CESifo.
Calvo, Guillermo A., and Carmen M. Reinhart (2000), "Fear of floating," NBER Working Paper No. 7993.
Canzoneri, Matthew B., Robert E. Cumby and Behzad T. Diba (2002), "The Need for International Policy Coordination: What's Old, What's New, What's Yet to Come?" NBER Working Paper No. 8765.
Cavallo, Michele, Kate Kisselev, Fabrizio Perri and Nouriel Roubini (2002), "Exchange Rates Overshooting and the Costs of Floating," working paper.
Cecchetti, Stephen G. (1998), "Policy Rules and Targets: Framing the Central Banker's Problem," Economic Policy Review of the Federal Reserve Bank of New York 4 (June 1998) 1-14.
Cecchetti, Stephen G., Hans Genberg, John Lipsky and Sushil Wadhwani (2000), Asset Prices and Central Bank Policy, Geneva Report on the World Economy 2, CEPR and ICMB.
Cecchetti, Stephen G., Hans Genberg and Sushil Wadhwani (2002), "Asset Prices in a Flexible Inflation Targeting Framework," working paper.
Cecchetti, Stephen G., and Junhan Kim (2003), "Inflation Targeting, Price Level Targeting, and Output Variability," paper presented to the NBER Conference on Inflation Targeting, January 2003.
Céspedes, Luis Felipe, Roberto Chang and Andres Velasco (2002), "Balance Sheets and Exchange Rate Policy," working paper.
Chari, V.V., Patrick J. Kehoe and Ellen McGrattan (2000), "Can Sticky Price Models Generate Volatile and Persistent Exchange Rates?", NBER Working Paper No. 7869.
Clarida, Richard, Jordi Gali, and Mark Gertler (1999), "The Science of Monetary Policy: A New Keynesian Perspective," Journal of Economic Literature 37, 1661-1707.
Clarida, Richard, Jordi Gali, and Mark Gertler (2001), "Optimal Monetary Policy in Open vs. Closed Economies," American Economic Review (May 2001).
Clarida, Richard, Jordi Gali, and Mark Gertler (2002), "A Simple Framework for International Monetary Policy Analysis," Journal of Monetary Economics 49, 879-904.
Clouse, James, Dale Henderson, Athanasios Orphanides, David Small and Peter Tinsley (2000), "Monetary Policy when the Nominal Short-Term Interest Rate is Zero," Journal of Money, Credit, and Banking 32 (November 2000, Part 2). (FEDS Working Paper No. 2000-51, Federal Reserve Board)
Coenen, Günter, and Volker Wieland (2003, revised), "The zero-interest-rate bound and the role of the exchange rate for monetary policy in Japan," Journal of Monetary Economics 50(5).
Cole, Harold L, and Maurice Obsrfeld (1991), "Commodity Trade and International Risk Sharing: How Much Do Financial Markets Matter?" Journal of Monetary Economics 28, 3-24.
Corsetti, Giancarlo, and Paolo Pesenti (2004a), "International Dimensions of Optimal Monetary Policy," working paper.
Corsetti, Giancarlo, and Paolo Pesenti (2004b), "The Simple Geometry of Transmission and Stabilization in Closed and Open Economy," working paper.
Crooks, Ed, and Tony Major (2003), "Dissent inside the Eurotower," Financial Times, March 5, 2003.
Dominguez, Kathryn M., and Jeffrey A. Frankel (1993), Does Foreign Exchange Intervention Work? Institute for International Economics, Washington, DC.
Dooley, Michael, and Peter Garber (2005), "Is it 1958 or 1968? Three Notes on the Longevity of the Revived Bretton Woods System," working paper.
Devereux, Michael B., and Charles Engel (2002), "Exchange Rate Pass-Through, Exchange Rate Volatility, and Exchange-Rate Disconnect," Journal of Monetary Economics 49, 913-940.
Dornbusch, Rudiger (1980), Open Economy Macroeconomics, Basic Books, New York.
Edwards, Sebastian (2005), "Is The U.S. Current Account Deficit Sustainable? And If Not, How Costly Is Adjusment Likely To Be?" working paper.
Eggertsson, Gauti B. (2003), "How to Fight Deflation in a Liquidity Trap: Committing to being Irresponsible," working paper.
Eggertsson, Gauti B., and Michael Woodford (2003), “The Zero Bound on Interest Rates and Optimal Monetary Policy,” Brookings Papers on Economic Activity 2003:1, 139-211.
Engel, Charles (2002), "Expenditure Switching and Exchange Rate Policy," working paper.
European Central Bank (1999), "The Stability-Oriented Monetary Policy Strategy of the Eurosystem," ECB Monthly Bulletin, January 1999, 39-50.
European Central Bank (2004), The Monetary Policy of the ECB, ECB, Frankfurt.
Fischer, Stanley (2001), "Exchange Rate Regimes: Is the Bipolar View Correct?" Journal of Economic Perspectives 15(2), 3-24.
Flamini, Alessandro (2004), "Open-Economy Inflation Targeting and Exchange Rate Pass Through," HEI Working Paper No. 04-2004.
Frankel, Jeffrey A. (1999), "No Single Currency Regime is Right for All Countries or at All Times," NBER Working Paper 7338.
Friberg, Richard (1998), "In Which Currency Should Exporters Set Their Prices," Journal of International Economics 45, 59-76.
Friedman, Milton (1968), "The Role of Monetary Policy," American Economic Review 58, 1-17.
Friedman, Milton (1969), "The Optimum Quantity of Money", in The Optimum Quantity of Money and Other Essays, Aldine.
Gali, Jordi (2001), "Monetary Policy in the Early Years of EMU," working paper.
Gali, Jordi, and Tommaso Monacelli (2002), "Optimal Monetary Policy and Exchange Rate Volatility in a Small Open Economy," working paper, March.
Gali, Jordi, Stefan Gerlach, Julio Rotemberg, Harald Uhlig, and Michael Woodford (2004), Monetary Policy Strategy of the ECB Revisited, CEPR.
Gerlach, Stefan, and Lars E.O. Svensson (2003), "Money and Inflation in the Euro Area: A Case for Monetary Indicators?" Journal of Monetary Economics 50 (2003) 1649-1672.
Gertler, Mark, Simon Gilchrist and Fabio Massimo Natalucci (2001), "External Constraints on Monetary Policy and the Financial Accelerator," working paper.
Giannoni, Marc, and Michael Woodford (2002), "Optimal Interest-Rate Rules: I. General Theory," NBER Working Paper No. 9419.
Goodfriend, Marvin (2000), "Overcoming the Zero Bound on Interest Rate Policy," Journal of Money, Credit, and Banking 32 (November 2000, Part 2), 1007-1035.
Gourinchas, Pierre-Olivier, and Helene Rey (2004), "International finnancial adjustment," working paper.
Henderson, Dale, and Kenneth Rogoff (1982), "Negative net foreign asset positions and stability in a world portfolio balance model," Journal of International Economics 13, 85-104.
Hetzel, Robert L. (2000), "The Taylor Rule: Is it a Useful Guide to Understanding Monetary Policy?" Quarterly Review, Federal Reserve Bank of Richmond, Spring 2000, 1-33.
Issing, Otmar, Vitor Gaspar, Ignazio Angeloni and Oreste Tristiani (2001), Monetary Policy in the Euro Area, Cambridge University Press.
Ito, Takatoshi , and Frederic S. Mishkin (2004), "Two Decades of Japanese Monetary Policy and the Deflation Problem," NBER Working Paper No. 10878.
Jeanne, Olivier, and Lars E.O. Svensson (2004), "Credible Commitment to Optimal Escape from a Liquidity Trap: The Role of the Balance Sheet of an Independent Central Bank," working paper.
Kollman, Robert (2001), "Monetar Policy Rules in the Open Economy: Effects on Welfare and Business Cycles," working paper, University of Bonn.
Kouri, Pentti (1976), "Capital flows and the dynamics of the exchange rate," Seminar Paper No. 67, Institute for International Economic Studies, Stockholm.
Kouri, Pentti (1983), "Balance of payments and the foreign exchange market: A dynamic partial equilibrium model," in Bhandari, J., and B. Putnam, eds., Economic Interdependence and Flexible Exchange Rates, MIT Press, Cambridge, MA, 116-156.
Krugman, Paul (1998), "It’s Baaack: Japan’s Slump and the Return of the Liquidity Trap," Brookings Papers on Economic Activity 1998(2), 137-205.
Krugman, Paul (2001), "The Mundell-Fleming Model," Lecture notes 9/18/01.
Lane, Philip R. (2001), "The New Open Economy Macroeconomics: A Survey," Journal of International Economics 54, 235-266.
Lane, P., and Milesi-Ferretti, G. (2004), "Financial globalization and exchange rates," NBER Macroeconomics Annual, 73-115.
McCallum, Bennett T. (1999a), "Issues in the Design of Monetary Policy Rules," in Taylor, John B., and Michael Woodford, eds., Handbook of Macroeconomics, Vol. 1C, North-Holland, chap. 23. (NBER Working Paper No. 6016.)
McCallum, Bennett T. (2000), "Theoretical Analysis Regarding a Zero Lower Bound on Nominal Interest Rates," Journal of Money, Credit, and Banking 32 (November 2000, Part 2), 870-904.
McCallum, Bennett T. (2002), "Japanese Monetary Policy 1991-2001," Federal Reserve Bank of Richmond Economic Quarterly 89, forthcoming.
McCallum, Bennett T. (2005), "A Monetary Policy Rule for Automatic Prevention of a Liquidity Trap," NBER WP No. 11056.
McCallum, Bennett T., and Edward Nelson (1999), "Nominal Income Targeting in an Open-Economy Optimizing Model, Journal of Monetary Economics 43, 553-578.
McCallum, Bennett T., and Edward Nelson (2000), "Monetary Policy for an Open Economy: An Alternative Framework with Optimizing Agents and Sticky Prices," Oxford Review of Economic Policy 16 (Winter 2000), 74-91.
McKinnon, Ronald, and Gunther Schnabl (2002), "Synchronized Business Cycles in East Asia and Fluctuations in the Yen/Dollar Exchange Rate," working paper, Stanford University.
Meltzer, Allan H. (1999), "A Policy for Japanese Recovery," working paper.
Meltzer, Allan H. (n.d.), "Money," draft encyclopedia entry.
Mishkin, Frederic S. (1995), "Symposium on the Monetary Transmission Mechanism," Journal of Economic Perspectives 9(4), 3-10.
Mishkin, Frederic S. (2000), The Economics of Money, Banking and Financial Markets, 6th edition, Addison-Wesley Publishing.
Mishkin, Frederic S., and Miguel A. Savastano (1999), "Monetary Policy Strategies for Latin America," working paper.
Nelson, Eward (2002), "Comment on Clarida, Gali and Gertler (2002)."
Nelson, Edward (2003), "The Future of Monetary Aggregates in Monetary Policy Analysis," Journal of Monetary Economics, forthcoming.
Obstfeld, Maurice (2004), "External Adjustment," Review of World Economics, forthcoming.
Obstfeld, Maurice (2004b), "Globalization, Macroeconomic Performance, and the Exchange Rates of Emerging Economies," Monetary and Economic Studies 22(S-1), 29-55.
Obstfeld, Maurice, and Kenneth Rogoff (1995), "The Mirage of Fixed Exchange Rates," Journal of Economic Perspectives 9(4), 73-96.
Obstfeld, Maurice, and Kenneth Rogoff (1996), Foundations of International Macroeconomics, MIT Press.
Obstfeld, Maurice, and Kenneth Rogoff (2000), "New Directions for Stochastic Open Economy Models," Journal of International Economics 50, 117-153.
Obstfeld, Maurice, and Kenneth Rogoff (2000b), "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?" NBER Macroeconomics Annual 15, 339-390.
Obstfeld, Maurice, and Kenneth Rogoff (2002), "Global Implications of Self-Oriented National Monetary Rules," Quarterly Journal of Economics 117, 503-36.
Obstfeld, Maurice, and Kenneth Rogoff (2004), "The unsustainable U.S. current account revisited," NBER Working Paper No. 10869.
Obstfeld, Maurice, and Kenneth Rogoff (2005), "Global Exchange Rate Adjustments and Global Current Account Imbalances," working paper.
Orphanides, Athanasios, and Volker Wieland (1999), "Efficient Monetary Policy Design Near Price Stability," working paper, Federal Reserve Board.
Posen, Adam S. (1998), Restoring Japan's Economic Growth, Institute for International Economics, Washington, DC.
Reifschneider, David, and John Williams (2000), "Three Lessons for Monetary Policy in a Low Inflation Era," Journal of Money, Credit, and Banking 32 (November 2000, Part 2). (FEDS Working Paper No. 1999-44, Federal Reserve Board.)
Reinhart, Carmen M., and Kenneth S. Rogoff (2002), "The Modern History of Exchange Rate Arrangements: A Reinterpretation," NBER Working Paper No. 8963.
Rogoff, Kenneth (2002), "Dornbusch's Overshooting Model after Twenty-Five Years," IMF Working Paper WP/02/29.
Rotemberg, Julio J., and Michael Woodford (1997), "An Optimization-Based Econometric Framework for the Evaluation of Monetary Policy," NBER Macroeconomics Annual 1997, 297-346.
Roubini, Noriel, and Brad Setser (2004), "The US as a Net Debtor: The Sustainability of the US External Balance," http://www.stern.nyu.edu/globalmacro/.
Rudebusch, Glenn, and Lars E.O. Svensson (1999), "Policy Rules for Inflation Targeting," in John B. Taylor (ed.), Monetary Policy Rules, University of Chicago Press, 1999.
Schmitt-Grohe, Stephanie, and Martin Uribe (2001), "Closing Small Open Economy Models," Working Paper.
Smets, Frank, and Raf Wouters (2001), "Openness, Imperfect Exchange-Rate Pass-Through and Monetary Policy," Working Paper.
Söderlind, Paul (1999), "Solution and Estimation of RE Macromodels with Optimal Policy," European Economic Review 43, 813-823.
Sutherland, Alan (2000), "Inflation Targeting in a Small Open Economy," working paper.
Svensson, Lars E.O. (1993), "Term, Inflation, and Foreign Exchange Risk Premia: A Unified Treatment," NBER working paper No. 4544.
Svensson, Lars E.O. (1997a), "Exchange rate target or inflation target for Norway?" in Anne Berit Christiansen and Jan Fredrik Qvigstad, eds., Choosing a Monetary Policy Target, Scandinavian University Press (Universitetsforlaget AS), Oslo, 120-138.
Svensson, Lars E.O. (1997b), "Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets," European Economic Review 41 (1997), 1111-1146.
Svensson, Lars E.O. (1999a), "Inflation Targeting as a Monetary Policy Rule," Journal of Monetary Economics 43, 607-654.
Svensson, Lars E.O. (1999b), "Monetary Policy Issues for the Eurosystem," Carnegie-Rochester Conferences Series on Public Policy 51-1, 79-136.
Svensson, Lars E.O. (2000a), "The First Year of the Eurosystem: Inflation Targeting or Not?" American Economic Review: Papers and Proceedings 90, May 2000, 95-99.
Svensson, Lars E.O. (2000b), "Open-Economy Inflation Targeting," Journal of International Economics 50 (2000), 155-183.
Svensson, Lars E.O. (2001a), "Price Stability as a Target for Monetary Policy: Defining and Maintaining Price Stability," in Deutsche Bundesbank, ed. (2001), The Monetary Transmission Process: Recent Developments and Lessons for Europe, Palgrave, New York, 60-102.
Svensson, Lars E.O. (2001b), "The Zero Bound in an Open Economy: A Foolproof Way of Escaping from a Liquidity Trap," Monetary and Economic Studies 19(S-1), February 2001, 277-312.
Svensson, Lars E.O. (2003a), "Escaping from a Liquidity Trap and Deflation: The Foolproof Way and Others," Journal of Economic Perspectives 17-4 (Fall 2003) 145-166.
Svensson, Lars E.O. (2003b), "What Is Wrong with Taylor Rules? Using Judgment in Monetary Policy through Targeting Rules," Journal of Economic Literature 41, 426-477.
Svensson, Lars E.O. (2003c), "In the Right Direction, But Not Enough: The Modification of the Monetary-Policy Strategy of the ECB," briefing paper to the European Parliament.
Svensson, Lars E.O. (2004), "The Magic of the Exchange Rate: Optimal Escape from a Liquidity Trap in Small and Large Open Economies," working paper.
Svensson, Lars E.O. (2005a), "Monetary Policy with Judgment: Forecast Targeting," working paper.
Svensson, Lars E.O. (2005b), "Optimization under Commitment and Discretion, the Recursive Saddlepoint Method, and Targeting Rules and Instrument Rules: Lecture Notes."
Svensson, Lars E.O., and Sweder van Wijnbergen (1989), "Excess Capacity, Monopolistic Competition and International Transmission of Monetary Disturbances," Economic Journal 99, 785-805.
Svensson, Lars E.O., and Michael Woodford (2003), "Indicator Variables for Optimal Policy," Journal of Monetary Economics 50, 691-720.
Svensson, Lars E.O., and Michael Woodford (2005), "Implementing Optimal Policy through Inflation-Forecast Targeting," in Bernanke, Ben S., and Michael Woodford, eds. (2005) 19-83.
Taylor, John B. (1993), "Discretion versus Policy Rules in Practice," Carnegie-Rochester Conference Series on Public Policy 39, 195-214.
Taylor, John B. (1999), "A Historical Analysis of Monetary Policy Rules," in Taylor, John B., ed., Monetary Policy Rules, Chicago: Univ. of Chicago Press.
Tille, Cedric (2004), "Financial Integration and the Wealth Effect of Exchange Rate Fluctuations," working paper.
Truman, Edwin (2003), Inflation Targeting and the International Financial System: Challenges and Opportunities, manuscript, Institute for International Economics.
Ueda, Kazuo (2000), "Why the Bank of Japan Won't Target Inflation," Wall Street Journal, March 6, 2000.
Ventura, J. (2003), "Towards a theory of current accounts," The World Economy.
Vestin, David (2003), "Price-level targeting vs inflation targeting in a forward-looking model," working paper.
Walsh, Carl (1998), Monetary Theory and Policy, MIT Press.
Weerapana, Akila (2000), “The Performance of Simple Monetary Policy Rules in a Large Open Economy," Wellesley College Department of Economics Working Paper
2000-05.
Wicksell, Knut (1898), Geldzins und Güterpreise, Jena. English translation: Interest and Prices, 1936. Reprinted 1965, Kelley, New York.
Woodford, Michael (1998), "Doing Without Money: Controlling Inflation in a Post-Monetary World," Review of Economic Dynamics 1: 173-219. (NBER Working Paper No. 6168.)
Woodford, Michael (1999), "Inflation Stabilization and Welfare," working paper.
Woodford, Michael (2000), "Pitfalls of Forward-Looking Monetary Policy," American Economic Review 90, 100-104.
Woodford, Michael (2001), "The Taylor Rule and Optimal Monetary Policy," American Economic Review 91, 232-237.
Woodford, Michael (2003), Interest and Prices: Foundations of a Theory of Monetary Policy, Princeton University Press.
Woodford, Michael (2003-2), "Price-Level Determination under Interest-Rate Rules," chap. 2 of Interest and Prices: Foundations of a Theory of Monetary Policy.
Woodford, Michael (2003-3), "Optimizing Models with Nominal Rigidities," chap. 3 of Interest and Prices: Foundations of a Theory of Monetary Policy.
Woodford, Michael (2003-6), "Inflation Stabilization and Welfare," chap. 6 of Interest and Prices: Foundations of a Theory of Monetary Policy.

Errors: Please email me about errors, for instance in the reading list and URLs.

Courses 2004-05: 200 504 554 581c | Blackboard | Calendars | Students

Revised maj 14, 2006 .