Essays in the new open macroeconomics

The "New Open Economy Macroeconomics" refers to a growing body of literature that offers a rigorous approach to addressing open economy issues. The unifying feature of this literature is the introduction of nominal rigidities and market imperfections into a dynamic general equilibrium model with well specified microfoundations. The main objective of this thesis is to examine some of the open questions in international macroeconomics within this framework.;The first and the second chapters present a stochastic dynamic general equilibrium model for the analysis of monetary policy in open economies. In particular, monetary policy is modelled through interest rate feedback rules.;Chapter 1 focuses on the relation between real exchange rate persistence and monetary shocks. There is no relationship of proportionality between the time during which prices remain sticky and the persistence of the response of the real exchange rate: high nominal price rigidity is not sufficient, per se, in generating any persistence following a monetary shock. An inertial behavior in the real exchange rate can be generated when the degrees of nominal price stickiness vary across and within countries and when monetary policy exhibits nominal interest rate smoothing.;Chapter 2 analyzes the relation between the behavior of the nominal exchange rate, the terms of trade, other macroeconomics variables and the exchange rate regime. When monetary policy reacts to domestic objectives (i.e. inflation and the output gap) the nominal exchange rate is non stationary. Exchange rate volatility is reduced when monetary policy reacts to deviations of the nominal exchange rate from a target. When the costs implied by the volatility of the nominal interest rates are considered, a control of the exchange rate is desirable.;Chapter 3 proposes a model to analyze the importance of international labor mobility for the choice of the exchange rate regime. With monopolistically competitive product markets, labor mobility expands the production possibility set and raises welfare irrespective of the price setting mechanism. On the other hand, when international markets are complete and labor supply enters linearly in the utility function, the degree of international labor mobility has no bearing on the choice of the exchange rate regime.