TY - BOOK ID - 84550548 TI - IMF Staff papers : Volume 32 No. 2. AU - International Monetary Fund. AU - International Monetary Fund PY - 1985 SN - 1475500521 1463993536 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Bank credit KW - Banking KW - Banks and Banking KW - Banks and banking, Foreign KW - Banks KW - Credit KW - Currencies KW - Currency KW - Depository Institutions KW - Exchange rate flexibility KW - Exchange rates KW - Exports and Imports KW - Finance KW - Financial institutions KW - Foreign Exchange KW - Foreign exchange KW - Government and the Monetary System KW - International banking KW - International economics KW - International finance KW - Loans KW - Macroeconomics KW - Micro Finance Institutions KW - Monetary economics KW - Monetary Policy, Central Banking, and the Supply of Money and Credit: General KW - Monetary Systems KW - Money and Monetary Policy KW - Money KW - Mortgages KW - Payment Systems KW - Regimes KW - Standards KW - Trade: General KW - United States UR - https://www.unicat.be/uniCat?func=search&query=sysid:84550548 AB - The monetary approach, however, is based on a balance-sheet identity that does not itself yield testable hypotheses. Predictions capable of being disproved can be derived only from a structural model used in conjunction with this approach. This paper analyzes the behavior of a small open economy in an alternative Keynesian framework that is characterized by short-run nominal wage rigidity and in which prices in a nontraded-goods sector are set by way of a mark-up equation. This Keynesian variant can generate short-run deviations of output from capacity as well as fluctuations in real exchange rates and real interest rate differentials. Nevertheless, it remains firmly embedded in the monetary approach. If this model represents an accurate description of an economy's short-run behavior, then framing stabilization program under “global monetarist” assumptions may well confront policymakers with undesirable consequences for the domestic economy while leaving them short of their balance of payments target. ER -