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We study the purchasing power parity (PPP) puzzle in a multisector, two-country, sticky-price model. Firms’ price stickiness differs across sectors, in accordance with recent microeconomic evidence on price setting in various countries. Combined with local currency pricing, these differences...
Persistent link: https://www.econbiz.de/10003781792
While the impact of exchange rate changes on economic growth has long been an issue of key importance in international macroeconomics, it has received renewed attention in recent years, owing to weaker growth rates and the debate on "currency wars". However, in spite of its prevalence in the...
Persistent link: https://www.econbiz.de/10010338713
Heterogeneity of marginal shipping costs leads to persistent and volatile deviations in real exchange rate. In a two-country, three-good endowment general equilibrium model, arbitrage firms use transportation technology which depends positively on distance and physical mass of goods. The model...
Persistent link: https://www.econbiz.de/10014060575
We examine how medium-term movements in real exchange rates and GDP vary with international financial conditions. For this purpose, we study the international transmission of productivity shocks across a variety of IRBC models that incorporate different assumptions about the persistence of...
Persistent link: https://www.econbiz.de/10012839806
We study the purchasing power parity (PPP) puzzle in a multi-sector, two-country, sticky-price model. Across sectors, firms differ in the extent of price stickiness, in accordance with recent microeconomic evidence on price setting in various countries. Combined with local currency pricing, this...
Persistent link: https://www.econbiz.de/10012715617
We study the purchasing power parity (PPP) puzzle in a multisector, two-country, sticky-price model. Firms' price stickiness differs across sectors, in accordance with recent microeconomic evidence on price setting in various countries. Combined with local currency pricing, these differences...
Persistent link: https://www.econbiz.de/10012722638
Most countries hold large gross asset positions, lending in domestic currency and borrowingin foreign. Thus, their balance sheets are exposed to nominal exchange rates. We argue thatwhen asset markets are incomplete, nominal exchange rate exposure allows countries topartially insure against...
Persistent link: https://www.econbiz.de/10012929919
We explore the effectiveness of capital controls in Colombia. We analyze the impact of administrative restrictions to capital flows on aggregate capital flows, the composition of capital flows, the real exchange rate, and economic activity using restricted versions of vector error correction...
Persistent link: https://www.econbiz.de/10012714096
The paper presents an N-country model with stock markets, in which a closed-form solution for the real exchange rate is derived. Risky asset prices and allocation of risky assets among countries are determined endogenously. Such a framework allows an analysis of how fundamental parameters, such...
Persistent link: https://www.econbiz.de/10013317997
We show that the quarterly bilateral real exchange rate for 1275 country pairs over 1980–2015 is positively correlated with the relative price of non-traded to traded goods, but that movements in the relative price measure are smaller than those in the real exchange rate. Variance...
Persistent link: https://www.econbiz.de/10012945763