Original scientific paper
https://doi.org/10.1080/1331677X.2021.2020672
External shocks in a small open economy: an evaluation of monetary policy rules
Xin Xu
Xiaoguang Xu
Abstract
This paper evaluates several small open economy DSGE models
and the impact of external shock spillovers on small open economies. We investigate five small economies (the UK, Australia,
Canada, New Zealand and Taiwan) and find that the welfare consequences vary depending on key domestic economic variables,
and the best interest-rate rule varies across models. Then we
examine the performances of the four types of models, a
preferred result has been found in a model which considers the
country risk premium, as the best rule could be obtained as long
as the selected parameters are calibrated for particular economies.
Keywords
Small open economy; monetary policy rules; external shocks
Hrčak ID:
302785
URI
Publication date:
31.3.2023.
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