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We derive a real gravity equation and gain several new insights that were hidden in the nominal specification used so far. Most importantly, the real effective exchange rate (REER) of the exporter and, via the importer's terms of trade, also the importer's REER matter, and we can identify the...
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macroeconomics, it has received renewed attention in recent years, owing to weaker growth rates and the debate on "currency wars …
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