Chari, Varadarajan V.; Kehoe, Patrick J.; McGrattan, … - 2021
shown that to a large extent these movements are driven by deviations from the law of one price for traded goods. In the … data, real and nominal exchange rates are about 6 times as volatile as relative price levels and they both are highly … persistent, with serial correlations of 0.85 and 0.83, respectively. This paper develops a sticky price model with price …