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This paper considers the general equilibrium relationship between exchange rates and global imbalances. It emphasizes that the exchange rate is not a primitive but an equilibrium price determined by the policy mix. It uses extensions of the two-country Obstfeld-Rogoff model to analyze the...
Persistent link: https://www.econbiz.de/10010286173
This paper considers the general equilibrium relationship between exchange rates and global imbalances. It emphasizes that the exchange rate is not a primitive but an equilibrium price determined by the policy mix. It uses extensions of the two-country Obstfeld-Rogoff model to analyze the...
Persistent link: https://www.econbiz.de/10008937609
This paper considers the general equilibrium relationship between exchange rates and global imbalances. It emphasizes that the exchange rate is not a primitive but an equilibrium price determined by the policy mix. It uses extensions of the two-country Obstfeld-Rogoff model to analyze the...
Persistent link: https://www.econbiz.de/10014183493
real exchange rates when financial markets are incomplete. However, cross-border trade in one domestic and one foreign … characterize how goods markets drive exchange rate cyclicality, taking into account trade in risk-free and/or risky assets. We show … that goods-market mechanisms come back into play, even when there is cross-border trade in two risk-free assets, as long as …
Persistent link: https://www.econbiz.de/10014474481
Empirical evidence documents substantial persistence in the adjustment process to nominal shocks. Existing open-economy models have failed either to generate interesting dynamics or found that the mechanisms are quantitatively weak. We consider the propagation of nominal shocks in a fully...
Persistent link: https://www.econbiz.de/10010321231
We study the joint dynamics of macroeconomic variables, bond yields, and the exchange rate in an empirical two-country New-Keynesian model complemented with a no-arbitrage term structure model. With Canadian and US data, we are able to study the impact of macroeconomic shocks from both countries...
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