The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

New Open Economy Macroeconomics

  • Giancarlo Corsetti
Reference work entry


‘New open economy macroeconomics’ (NOEM) refers to a body of literature embracing a new theoretical framework for policy analysis in open economy, aiming to overcome the limitations of the Mundell–Fleming model while preserving the empirical wisdom and policy friendliness of traditional analysis. NOEM contributions have developed general equilibrium models with imperfect competition and nominal rigidities, to reconsider conventional views on the transmission of monetary and exchange rate shocks; they have contributed to the design of optimal stabilization policies, identifying international dimensions of optimal monetary policy; and they have raised issues about the desirability of international policy coordination.


Disconnect puzzle Elasticity of substitution Exchange rate pass-through Expenditure switching effects Imperfect competition Inflationary bias International policy coordination International portfolio diversification International transmission mechanism Jensen’s inequality Law of one price Local currency pricing Mundell–Fleming model Neo-Wicksellian’ monetary economics New Keynesian macroeconomics New neoclassical synthesis New open economy macroeconomics Nominal rigidities Optimal monetary policy Optimal tariffs Output gap Producer currency pricing Stabilization Staggered price setting Sticky prices Terms of trade Trade costs Uncertainty 

JEL Classifications

F3 F4 
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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Giancarlo Corsetti
    • 1
  1. 1.