Publication

This paper analyzes the welfare effects of monetary policy in open economies using a dynamic general equilibrium two-country optimizing model. The distinguishing feature of the model is that households' preferences feature a 'keeping up with the Joneses' effect. The author argues that, depending on the strength of this effect, an expansive monetary policy can be a 'beggar-thyself' policy. Moreover, he finds that the welfare effects of monetary policy are asymmetric across countries.