Modelling real exchange rate behaviour: a cross-country study

1998 ◽  
Vol 8 (6) ◽  
pp. 577-587 ◽  
Author(s):  
Ashok Parikh ◽  
Geoffrey Williams
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Country Study ◽  
Cross Country ◽  
Rate Behaviour

Disaggregate Real Exchange Rate Behaviour

2007 ◽  
Vol 18 (4) ◽  
pp. 389-404 ◽  
Author(s):  
Giorgio Fazio ◽  
Peter McAdam ◽  
Ronald MacDonald
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Rate Behaviour

scholarly journals Demand Shocks and Open Economy Puzzles

2015 ◽  
Vol 105 (5) ◽  
pp. 644-649 ◽  
Author(s):  
Yan Bai ◽  
José-VÍctor RÍos-Rull
Keyword(s):  
Exchange Rate ◽  
Business Cycle ◽  
Real Exchange Rate ◽  
Open Economy ◽  
Perfect Matching ◽  
Trade Deficit ◽  
Real Business Cycle ◽  
Demand Shocks ◽  
Search Effort ◽  
Cross Country

We pose good markets frictions on top of an otherwise standard two-country international real business cycle (IRBC) model. Shopping for goods takes effort, which prevents perfect matching between customers and producers. An increase in search effort implies increased measured productivity. Demand shocks increase expenditures and search effort simultaneously increasing output, consumption, productivity, and the trade deficit and appreciating the real exchange rate. Thus we solve the Backus-Smith puzzle and we show that the cross country correlation of consumption is higher than that of output. Standard IRBC models cannot account for these puzzles along with movements in TFP.

Sign in / Sign up

Export Citation Format

Share Document