Can producer currency pricing models generate volatile real exchange rates? (English) Zbl 1253.91191
Summary: If the elasticities of substitution between traded and nontraded and between Home and Foreign traded goods are sufficiently low, then the real exchange rate generated by a model with full producer currency pricing is as volatile as in the data.
MSC:
| 91G70 | Statistical methods; risk measures |
Keywords:
real exchange rate volatility; producer currency pricing; elasticity of substitution; new open-economy macroeconomicsReferences:
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