The aim of this paper is to review the international dimensions of monetary policy within the theoretical framework of New Open Economy Macroeconomics (NOEM) literature. This paper analyzes implications of openness for monetary policy, gains from international monetary policy cooperation, and impact of globalization on optimal monetary policy within the context of NOEM. Building on general equilibrium models with imperfect competition and nominal rigidities, NOEM literature reconsidered the conventional views on transmission of monetary and exchange rate shocks. The NOEM literature provides an important framework for answering normative questions such as what international variables monetary policy makers should react to in an open economy, and whether there exist gains to international monetary coordination. Employing the framework of open economy New Keynesian models, the NOEM literature expands with the recent theoretical papers on the impact of financial and real globalization on monetary policy transmission mechanism.
Key words: New Open Economy Macroeconomics, Monetary Policy, Globalization. JEL Classificaton: F41, F42, F62, F68
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