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permanent shifts of the exchange rate and the price level if a central bank anchors long-run inflation expectations. In line … the price level to a temporary risk shock are permanent. Our theoretical discussion shows that adopting a credible long …-run price level target rather than a long-run inflation target avoids these permanent shifts of the exchange rate and the price …
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Using structural VARs, I find that external shocks are an important source of macroeconomic fluctuations in emerging markets. Furthermore, U.S. monetary policy shocks affect quickly and strongly interest rates and the exchange rate in a typical emerging market. The price level and real output in...
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This paper takes a first step in analysing how a monetary union performs in the presence of labour market asymmetries. Differences in wage flexibility, market power and country sizes are allowed for in a setting with both country-specific and aggregate shocks. The implications of asymmetries for...
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This paper points out an important difference between the effects of anticipated future exchange rate shocks on domestic and import prices when reputation effects exist. The distinction is relevant to discussions of the temporal stability of pass-through
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