New Open Macroeconomic And Monetary Policy Analysis Under Sticky Information

With the rapid development of the world economy, countries accelerate theprocess of opening. Market Integration of countries makes them contact each othermore closely. Research on the development of the world economy has become a hottopic among economists. More and more scholars begin to focus on the developmentof research in this field. At the same time, the methods of corresponding tointernational macroeconomics researches are constantly evolving.In this paper, based on the new open macroeconomic theory, we introduce theconcept of sticky-information. We assume that there exists sticky when manufacturersobtain information. And we established a new open macroeconomic DSGE modelwith sticky-information. In the framework of this model we analyze the affect ofdomestic production technology shock, currency shock and exchange rate shock onvariables such as output, inflation, and consumption. We also analyzed the impact ofchanges in the degree of openness and information to the economy of the entiremodel.Given a positive technology shock, it will cause an increase in income and output,Both the domestic and world inflation rate will decrease, real interest rates declines,and consumption increases. A positive currency shock would lead to a decline ininflation and output. A positive shock of exchange rates will cause a decrease ininterest rates. The inflation rate, output and consumption will rise. But these effectsare gradually dissipate over time. It means that these chocks does not have a lastingimpact effects.In contrast to the influence of the impact of different degree of openness, we findthat: When the degree of openness is smaller, the shocks on the impact of eachvariable is slower, smoother and longer. While a higher degree of openness, thereaction is more intense and more short duration. With the improvement of the opening level, the information transmits faster between each other. And it is moreefficient for the policy makers to take measures. So the model will can return to theequilibrium more quickly.The parameter θ represent the proportion of manufacturers who updated theirinformation. When the value is larger, it imply that there are more manufacturersupdate their information, and thus the viscosity information is smaller. Compared witheffects response to shocks at different levels of θ, we find that: the greater θ is, thesmaller viscosity is. And the responses of output, inflation and consumption to theshocks are more intense over time and return to a stable value time more slowly andtakes much time.