Duarte, Margarida; Obstfeld, Maurice - In: Journal of International Money and Finance 27 (2008) 6, pp. 949-957
This paper revisits the sticky-price pricing-to-market model of Devereux and Engel [Devereux, M.B., Engel, C., 2003. Monetary policy in the open economy revisited: price setting and exchange-rate flexibility. Review of Economic Studies 70(4), 765-783], in which fixed exchange rates are optimal...