This paper investigates the relationships between the degree of price stickiness (inflexibility), the variability of output, and that of the real exchange rate in an open economy under flexible exchange rates and capital mobility. We show that there exists, in general, a critical degree of price...

The study investigates how mis-allocation of Nigeria's foreign exchange among the consumer and capital goods and new materials between 1970 and 1983 contributed to the deep/worst business recession in the 1980s and 1990s. In recognition of the structural mal-adjustment problems faced by a debt...

Asset prices undergo long swings that revolve around benchmark levels. In currency markets, fluctuations involve real exchange rates that are highly persistent and that move in near-parallel fashion with nominal rates. The inability to explain these two regularities with one model has been...