Research Discussion Paper – RDP 2007-06 The Butterfly Effect of Small Open Economies

Contents

• Introduction
• The Model
• Stable Rational Expectations Equilibria
• Results
• Conclusion
• References

We are grateful to Adam Cagliarini for valuable discussions. We also wish to thank Fabio Ghironi, Peter Ireland, Christopher Kent, Federico Mandelman, Tommaso Monacelli and Kristoffer Nimark for useful suggestions. The views expressed in this paper are those of the authors and do not necessarily reflect those of the Reserve Bank of Australia.