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This paper argues that the primary force behind the large fall in real exchange rates that occurs after large devaluations is the slow adjustment in the price of nontradable goods and services. Our empirical analysis is based on data from four large devaluation episodes: Mexico (1994), Korea...
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, in particular by capturing the procyclic movements of monetary aggregates, inflation and interest rates. And its …
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buy the market good. An increase in inflation raises the price of the corruption service, reduces the non-market good …
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The short-run non-neutrality of money and its implications for inflation dynamics are examined in a monetary search … generate short-run non-neutrality. The response of prices and inflation to shocks of this type depends on the changes in … thus may result in sluggish price adjustment and persistent inflation despite the absence of restrictions of sellers …
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