Openness and the Effects of Monetary Policy on the Exchange Rates: An Empirical Analysis
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Tarih
2005
Yazarlar
Dergi Başlığı
Dergi ISSN
Cilt Başlığı
Yayıncı
Sejong Univ, Center Int Economics
Erişim Hakkı
info:eu-repo/semantics/openAccess
Özet
This paper examines whether the effects of monetary policy on the exchange rates depend on the degree of openness of an economy. Theoretically, it can be shown that the effect of openness on the ability of money to influence the exchange rate is ambiguous. In light of this, the purpose of this study is to investigate how the relationship between monetary policy and exchange rate is affected by openness, hence shedding some light on the theoretical ambiguity. Using annual data for a panel of 41 countries for the period 1988-2000, the paper's empirical results indicate that the effects of monetary policy on the exchange rates are negatively affected by economy's openness. It seems that the more open the economy, the smaller is the depreciation effects of a given increase in the money growth rate. More interestingly, contrary to conventional expectations, monetary expansions in developed countries do not seem to result in depreciation of the domestic currency.
Açıklama
Anahtar Kelimeler
Openness; monetary policy; exchange rate
Kaynak
Journal of Economic Integration
WoS Q Değeri
N/A
Scopus Q Değeri
Cilt
20
Sayı
1
