This study calibrates a two-country dynamic stochastic general equilibrium model to investigate numerically the impacts of monetary expansion in one, large country on a small country, and the optimal policy response. The calibration results demonstrate that the impacts vary with country size and the degree of exchange rate pass-through. The welfare examination shows that the overall welfare level under one country's monetary expansion can be smaller if the country sizes are more divergent. While the trades are subject to the exchange rate pass-through, the exchange rate management of the small country in response to the foreign monetary expansion in the large country can lower the welfare loss.