Article ID Journal Published Year Pages File Type
7366585 Journal of Macroeconomics 2018 52 Pages PDF
Abstract
I study how a system of international transfers based on dividend income affects monetary policy in a two-country model with incomplete asset markets. I show that macroeconomic shocks alter international transfer payments and determine cross-border wealth effects on labour supply, output and consumption. The direction of these effects depends on the nature of the underlying disturbance: technology and wage markup shocks cause wealth effects that stabilise consumption relative to output, whereas monetary and price markup shocks cause wealth effects that destabilise it. Numerical work shows that this affects the balance of monetary policy between inflation and output stabilisation.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
Authors
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