Relative Prices, Employment, and the Exchange Rate in an Economy with Foresight
研究小型开放经济中浮动汇率、粘性工资和理性预期下的货币政策效应，强调汇率贬值与名义工资通胀的联系，并探讨预期货币扩张可能引发的贬值-通胀恶性循环。
This paper studies the effects of monetary policy in a small, open economy with a floating exchange rate, sticky wages, and rational expectations in both the asset and labor markets. The model developed emphasizes the link between exchange-rate depreciation and nominal wage inflation, embodying it in an expectations-augmented Phillips curve. The economy studied produces both traded and non-traded goods, and thus provides a framework in which to explore the connection between the dynamic behavior of the exchange rate and the supply structure and degree of openness of the economy. In addition, the paper examines the "vicious circle" hypothesis, showing how an explosive cycle of exchange-rate depreciation and wage-price inflation may arise in response to an expected monetary expansion.