02042cas a2200241 a 4500 AALejournalIMF010562 230101c9999 xx r poo 0 0eng d 15.00 USD 9781451946932 1020-7635 BD-DhAAL BD-DhAAL International Monetary Fund. Research Dept. IMF Staff papers : Volume 32 No. 2. Washington, D.C. : International Monetary Fund, 1985. 1 online resource (206 pages) IMF Staff Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students 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. Mode of access: Internet IMF Staff Papers; IMF Staff Papers ; No. 1985/002 Full text available on IMF http://elibrary.imf.org/view/journals/024/1985/002/024.1985.issue-002-en.xml IMF e-Library