Consumer Search, Incomplete Exchange Rate Pass‐Through, and Optimal Interest Rate Policy
研究了消费者搜索摩擦如何导致不完全汇率传递和一价定律偏离，并推导出最优利率政策应瞄准这些偏离以减轻摩擦影响。
Abstract This paper studies utility‐maximizing monetary policy in a two‐country economy with consumer search frictions. Search frictions provide a microfoundation for incomplete exchange rate pass‐through and international deviations from the law of one price (LOP). I show that optimal interest rate policy targets deviations from the LOP and acts to mitigate the effect of search frictions. In a quantitative setting, with internationally correlated technology and preference shocks, optimal policy generates positive cross‐country correlation of nominal interest rates.