DISINFLATION AND EXCHANGE-RATE PASS-THROUGH
Keyword(s):
This paper analyzes exchange-rate dynamics following a money-based disinflation under different degrees of exchange-rate pass-through. Using a microfounded dynamic general equilibrium model with imperfect competition and nominal rigidities, it is shown that a monetary slowdown causes an appreciation of the exchange rate and a short-run fall in employment. Varying the degree of pass-through, however, significantly alters the magnitudes of these effects. As the degree of pass-through is reduced, the extent of the short-run appreciation of the exchange rate increases and the short-run impact of the disinflation on employment falls.
Keyword(s):
2018 ◽
Vol 3
(2)
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pp. 2-19
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Keyword(s):
2019 ◽
Vol 15
(5)
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pp. 971-989
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Keyword(s):
2015 ◽
Vol 34
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pp. 173-187
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Keyword(s):
2005 ◽
Vol 65
(2)
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pp. 349-374
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