Financial Frictions and Optimal Monetary Policy in a Small Open Economy

Borradores de Economia
Número: 
852
Publicado: 
Clasificación JEL: 
E44, E50, E52, E58, F41
Palabras clave: 
Financial Frictions, Optimal Interest Rate Rules, Interest Rate Spreads, Welfare

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In this paper we set up a small open economy model with financial frictions, following Curdia and Woodford (2010)’s model. Unlike other results in the literature such as Curdia and Woodford (2010), McCulley and Ramin (2008) and Taylor (2008), we find that