Abstract
The consensus view is that central banks under currency boards do not have tools for active monetary policy. In this paper, we analyze the foreign exchange fee as a monetary policy instrument that can be used by a central bank under a currency board. We develop a general equilibrium model showing that changes in this fee may have the same effects as a change in the monetary policy stance. Thus central banks under the currency board are shown to have an avenue to implement active monetary policy.
Recommended Citation
Jurgilas, Marius, "Monetary Policy Under a Currency Board" (2007). Economics Working Papers. 200734.
https://digitalcommons.lib.uconn.edu/econ_wpapers/200734