Vertically Integrated North-South Trade and the <i>Redux</i> Model
The paper uses the framework of Obstfeld and Rogoff's <i>Redux</i> model to study the impact of monetary shocks on exchange rate, terms of trade, and welfare in the context of a North-South trade. The authors show that a relative Northern monetary expansion can depreciate or appreciate its currency depending on whether the consumption elasticity of money demand and the degree of monopolistic distortion are low or high enough. This shock has asymmetric effects on welfare in such a way that "beggar-thyself" or "beggar-thy-neighbor" effects always occur. Copyright Blackwell Publishing Ltd 2004.
Year of publication: |
2004
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Authors: | Garcia-Cebro, Juan Antonio ; Varela-Santamaria, Ramon |
Published in: |
Review of International Economics. - Wiley Blackwell, ISSN 0965-7576. - Vol. 12.2004, 4, p. 643-661
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Publisher: |
Wiley Blackwell |
Saved in:
freely available
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