With the deep-going development of globalization and enhanced African unity for self-improvement, the international community is paying more and more attention to the standing of Africa and the role it plays. The Unit...With the deep-going development of globalization and enhanced African unity for self-improvement, the international community is paying more and more attention to the standing of Africa and the role it plays. The United States, Japan, Russia, India and the European Union (EU), are strengthening and upgrading, out of their own needs, their political and economic relations with African countries in a bid to consolidate their strategic interests in the continent.展开更多
In this paper, we examine the effects of foreign productivity shocks on monetary policy in a symmetric open economy. Our two-country model incorporates the New Keynesian features of price stickiness and monopolistic c...In this paper, we examine the effects of foreign productivity shocks on monetary policy in a symmetric open economy. Our two-country model incorporates the New Keynesian features of price stickiness and monopolistic competition based on the cost channel of Ravenna and Walsh （2006）. In particular, in response to asymmetric productivity shocks, firms in one country achieve a more efficient level of production than those in another economy. Because the terms of trade are directly affected by changes in both economies＇ output levels, international trade creates a transmission channel for inflation dynamics in which a deflationary spiral in foreign producer prices reduces domestic output. When there is a decline in economic activity, the monetary authority should react to this adverse situation by lowering the key interest rate. The impulse response function from the model shows that a productivity shock can cause a real depreciation of the exchange rate when economies are closely integrated through international trade.展开更多
文摘With the deep-going development of globalization and enhanced African unity for self-improvement, the international community is paying more and more attention to the standing of Africa and the role it plays. The United States, Japan, Russia, India and the European Union (EU), are strengthening and upgrading, out of their own needs, their political and economic relations with African countries in a bid to consolidate their strategic interests in the continent.
文摘In this paper, we examine the effects of foreign productivity shocks on monetary policy in a symmetric open economy. Our two-country model incorporates the New Keynesian features of price stickiness and monopolistic competition based on the cost channel of Ravenna and Walsh （2006）. In particular, in response to asymmetric productivity shocks, firms in one country achieve a more efficient level of production than those in another economy. Because the terms of trade are directly affected by changes in both economies＇ output levels, international trade creates a transmission channel for inflation dynamics in which a deflationary spiral in foreign producer prices reduces domestic output. When there is a decline in economic activity, the monetary authority should react to this adverse situation by lowering the key interest rate. The impulse response function from the model shows that a productivity shock can cause a real depreciation of the exchange rate when economies are closely integrated through international trade.
