Teaching New Open Macroeconomics with a Simple "Toy Model"

Abstract

This article introduces a static model of the New International Macroeconomics to address issues of monetary policy implementation in the open economy. This framework makes it possible to address in a simple fashion standard questions of open macroeconomics such as the effectiveness of economic policy according to the exchange rate. It is extended to analyze dirty floating regimes and the reasons that may justify the lack of coordination of monetary policies in a world characterized by strong commercial and financial spillovers.(original abstract)