Terms-of-Trade Shocks and Exchange Rate Regimes in a Small Open Economy
We examine the impact of terms-of-trade shocks on key macroeconomic variables by numerically solving a dynamic stochastic general equilibrium model of a small open economy. The model considers nominal price rigidity under different exchange rate regimes. The numerical solutions obtained are consistent with the empirical regularities documented by Broda (2004), in which output responses to shocks are smoother in floats than in pegs; in moving from pegs to floats, the rise in nominal exchange rate volatility is coupled by the rise in real exchange rate volatility; and in both exchange rate regimes, net foreign assets is the most volatile variable. Copyright © 2006 The Economic Society of Australia.
Year of publication: |
2006
|
---|---|
Authors: | CHIA, WAI-MUN ; ALBA, JOSEPH D. |
Published in: |
The Economic Record. - Economic Society of Australia - ESA, ISSN 1475-4932. - Vol. 82.2006, s1, p. 41-41
|
Publisher: |
Economic Society of Australia - ESA |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Foreign output shocks, monetary rules and macroeconomic volatilities in small open economies
Alba, Joseph D., (2011)
-
A Welfare Evaluation of East Asian Monetary Policy Regimes under Foreign Output Shock
Alba, Joseph D., (2012)
-
Oil shocks and monetary policy rules in emerging economies
Alba, Joseph D., (2013)
- More ...