ابعاد بین المللی از سیاست های پولی بهینه

This paper provides a baseline general equilibrium model of optimal monetary policy among interdependent economies with monopolistic firms and nominal rigidities. An inward-looking policy of domestic price stabilization is not optimal when firms’ markups are exposed to currency fluctuations. Such a policy raises exchange rate volatility, leading foreign exporters to charge higher prices vis-à-vis increased uncertainty in the export market. As higher import prices reduce the purchasing power of domestic consumers, optimal monetary rules trade off a larger domestic output gap against lower consumer prices. Optimal rules in a world Nash equilibrium lead to less exchange rate volatility relative to both inward-looking rules and discretionary policies, even when the latter do not suffer from any inflationary (or deflationary) bias. Gains from international monetary cooperation are related in a non-monotonic way to the degree of exchange rate pass-through.

In the long-standing debate on optimal monetary policy, an open question is whether rules designed to fit the specific features of closed economies may be successfully adopted by open, interdependent, trade-oriented countries, or, rather, there exist policy trade-offs that have a specific international dimension. Some view exchange rate fluctuations as instrumental to the adjustment of relative prices. In this case, ‘inward-looking’ policies attempting to stabilize domestic prices and close the output gap are deemed to be desirable regardless of the degree of trade openness: no attempt should be made to offset currency movements and reduce the variability of import prices. But if terms of trade fluctuations are destabilizing sources of uncertainty, domestic monetary policy should be reactive to the exchange rate. A related set of questions concerns what welfare gains (if any) can be achieved through international monetary cooperation. In this paper, we assess these issues by building a baseline general-equilibrium model of optimal monetary policy among interdependent economies with nominal rigidities, imperfect competition in production, and forward-looking price-setting.1 The main conclusion of our analysis is that, in an open-economy context, policies exclusively focused on stabilizing internal prices and output gap may actually result, on average, in inefficiently high consumer prices of imports, and therefore suboptimal welfare levels for domestic consumers. The intuition underlying this result is that monetary policies aimed at internal stabilization can raise the volatility of world demand and the exchange rate. Foreign firms whose export revenue is exposed to such volatility will attempt to reduce the sensitivity of their profits to exchange rate fluctuations. In our economy, they can do so by charging higher average prices in the domestic market. Ultimately, higher average prices of imports amount to a reduction of domestic consumers’ real wealth. When this is the case, domestic policies that ignore their spillover effects on the markups and profits of foreign exporters can only be inefficient. In economies with these characteristics, domestic policymakers can improve welfare by trading off, at the margin, output gap stability against lower consumer prices. More specifically, we show that, consistent with the goal of targeting domestic inflation, optimal monetary rules should stabilize a CPI-weighted average of the markups of all firms selling in the domestic market. Our conclusions by no means rule out the possibility that optimal monetary policies in open economies be similar to the ones derived in a closed-economy context. Indeed, in the cases analyzed by Clarida et al. (2001) or Obstfeld (2002), internal inflation targeting is efficient exactly because firms’ markups are unaffected by exchange rate movements. Consistent with the argument in favor of flexible exchange rates made by Friedman (1953), in such an economy monetary authorities can engineer the right adjustment in relative prices through exchange rate movements, despite the presence of nominal rigidities. Furthermore, our conclusions on the suboptimality of ‘inward-looking’ policies need not mechanically imply that there is a case for international policy cooperation. In our model there are no welfare gains from entering internationally binding agreements not only when there are no deviations from the law of one price and exporters’ revenues are independent of exchange rate movements (as in Obstfeld and Rogoff, 2002), but also when local prices are completely insulated from exchange rate fluctuations, so that exporters’ revenues move proportionally to the exchange rate (as in Devereux and Engel, 2003). That is, under the assumptions of either complete or zero pass-through, monetary policies are strategically independent and there are no policy spillovers in equilibrium. However, in our model cooperation is beneficial for economies between the two cases described above. Under a more general specification of preferences, Benigno and Benigno (2003) show that gains from cooperation can materialize, and inward-looking policies are suboptimal, even if there is full exchange rate pass-through worldwide. Using the same logic as above, we finally show that commitment is superior to discretion even when discretionary policies do not suffer from any inflationary (or deflationary) bias. This is because, given preset prices by firms, a discretionary policymaker has an incentive to over-stabilize the domestic economy and use monetary policy to tilt terms of trade in favor of domestic agents. But any systematic attempt to exploit this opportunity is doomed to lower domestic welfare on average, as foreign exporters react by presetting higher prices in the domestic market. Building on Corsetti and Pesenti (2001), we set up a model that can be solved in closed form, without resorting to loglinear approximations. Different from many other contributions in the new open-economy macroeconomic literature, all our welfare results are derived without specifying a particular distribution of the stochastic disturbances underlying the economy. The other side of the coin is that our framework is deliberately stylized, and obviously abstracts from many crucial considerations such as the role of international capital flows or cost-push shocks. In fact, the spirit of our exercise is to provide a first step toward a welfare-based exploration of which dimensions of monetary policy can be regarded, specifically, as international. The paper is organized as follows. Section 2 introduces the model. Section 3 analyzes optimal policy. We first derive a choice-theoretic policy loss function and consider three equivalent representations. Next, we characterize optimal rules and discuss their implications. In Section 4 we consider some extensions and corollaries of the baseline model, assessing the case for international monetary cooperation, revisiting the ‘rules-vs.-discretion’ debate for an open economy, and modifying price-setting. Section 5 concludes.

The key message of our contribution is that standard policy objectives for a closed economy setting may not be appropriate for the design of optimal monetary policy in open economies. Inward-looking goals in policy making—such as the complete stabilization of domestic output and domestic producers’ markups—are not optimal in interdependent economies in which firms’ profits are exposed to currency fluctuations. Intuitively, in our economy producers set higher prices in response to higher profit volatility. Unless markups are insulated from exchange rate movements, inward-looking policies make the profits of foreign exporters suboptimally volatile. At an optimum, the welfare costs from higher consumer prices must equate the benefits of bringing domestic output towards its potential, flex-price level. In our study, the degree of pass-through and exchange rate exposure in domestic and foreign markets emerges as a key parameter in the design of optimal monetary rules. If the exposure of firms’ revenue to exchange rate fluctuations is limited, inward-looking policymakers assign high priority to stabilizing domestic output and prices, with ‘benign neglect’ of exchange rate movements. Otherwise, optimal policymakers ‘think globally,’ taking into account the repercussions of exchange rate volatility on import prices; hence, the monetary stances in the world economy come to mimic each other, reducing currency volatility. Thus, a world economy closer to purchasing power parity will be characterized by higher exchange rate volatility and monetary stances more closely focused on internal conditions, and vice-versa. These considerations cast new light on the case for international monetary cooperation. Interdependent economies gain little from cooperating in the design of policy rules when exchange rate fluctuations do not impinge on exporters’ profits, so that inward-looking policies are optimal. The same can be true even when firms’ profits are highly exposed to the exchange rate. This is because, even without international agreement, domestic policies would optimally respond symmetrically to worldwide cyclical developments. For intermediate cases (in our model corresponding to intermediate levels of pass-through) such as those observed for a wide range of countries, there will be gains from cooperation.