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International Dimensions of Monetary Policy

United States monetary policy has traditionally been modeled under the assumption that the domestic economy is immune to international factors and exogenous shocks. Such an assumption is increasingly unrealistic in the age of integrated capital markets, tightened links between national economies, and reduced trading costs. International Dimensions of Monetary Policy brings together fresh research to address the repercussions of the continuing evolution toward globalization for the conduct of monetary policy.

In this comprehensive book, the authors examine the real and potential effects of increased openness and exposure to international economic dynamics from a variety of perspectives. Their findings reveal that central banks continue to influence decisively domestic economic outcomes—even inflation—suggesting that international factors may have a limited role in national performance. International Dimensions of Monetary Policy will lead the way in analyzing monetary policy measures in complex economies.

Table of Contents


Jordi Galí and Mark Gertler

I. Baseline Models for International Monetary Policy Analysis

1. Globalization and Monetary Control

Michael Woodford

Comment: David Romer

2. The Transmission of Domestic Shocks in Open Economies

Christopher Erceg, Christopher Gust, and David López- Salido

Comment: Malin Adolfson

3. International Transmission and Monetary Policy Cooperation

Günter Coenen, Giovanni Lombardo, Frank Smets, and Roland Straub

Comment: Christopher A. Sims

II. Extending the Baseline Models to Address Policy Issues

4. Current Account Dynamics and Monetary Policy

Andrea Ferrero, Mark Gertler, and Lars E. O. Svensson

Comment: Paolo Pesenti

5. Monetary Rules in Emerging Economies with Financial Market Imperfections

Nicoletta Batini, Paul Levine, and Joseph Pearlman

Comment: Frederic S. Mishkin

6. Optimal Monetary Policy and the Sources of Local- Currency Price Stability

Giancarlo Corsetti, Luca Dedola, and Sylvain Leduc

Comment: Philippe Bacchetta

III. Empirical Issues in International Monetary Policy Analysis

7. The Macroeconomic Effects of Oil Price Shocks: Why Are the 2000s so Different from the 1970s?

Olivier J. Blanchard and Jordi Galí

Comment: Julio J. Rotemberg

8. Global Forces and Monetary Policy Effectiveness

Jean Boivin and Marc P. Giannoni

Comment: Lucrezia Reichlin

Rejoinder by Jean Boivin and Marc P. Giannoni

9. Monetary Policy in Europe versus the United States: What Explains the Difference?

Harald Uhlig

Comment: Andrew Levin

10. Globalization and Infl ation Dynamics: The Impact of Increased Competition

Argia M. Sbordone

Comment: Tommaso Monacelli

IV. General Observations

11. The Effects of Globalization on Infl ation, Liquidity, and Monetary Policy

Lucas Papademos

12. Globalization and Monetary Policy: Missions Impossible

John B. Taylor

Panel Remarks

Donald L. Kohn, Board of Governors of the

Federal Reserve System

Rakesh Mohan, Reserve Bank of India

José Viñals, Bank of Spain


Author Index

Subject Index

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