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and PPI. A supply shock shows itself in instant PPI adjustment, a demand shock in CPI. Thus, in the CPI inflation equation … shocks to the PPI inflation, production and employment equations. In the second part we implement the model on monthly data …
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In this essay I've demonstrated that there is evidence of unstable and non-linear relationship between fundamental variables and exchange rates. I have tried to "tune" Frankel's (1979) real interest differential model of exchange rate fluctuation. I have distinguished between Czech crown/Euro...
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