scholarly journals A three-country Kaldorian business cycle model with fixed exchange rates: A continuous time analysis

2021 ◽  
Vol 0 (0) ◽  
pp. 0
Author(s):  
Rudolf Zimka ◽  
Michal Demetrian ◽  
Toichiro Asada ◽  
Toshio Inaba
Keyword(s):  
Business Cycle ◽  
Exchange Rates ◽  
Continuous Time ◽  
Time Analysis ◽  
Cycle Model ◽  
Fixed Exchange Rates ◽  
Business Cycle Model

scholarly journals The Dynamic Behavior of the Real Exchange Rate in Sticky Price Models

2008 ◽  
Vol 98 (1) ◽  
pp. 519-533 ◽  
Author(s):  
Jón Steinsson
Keyword(s):  
Exchange Rate ◽  
Business Cycle ◽  
Exchange Rates ◽  
Real Exchange Rate ◽  
Real Exchange Rates ◽  
Cycle Model ◽  
The Real ◽  
Developed Economies ◽  
Business Cycle Model ◽  
Real Shocks

Existing empirical evidence suggests that real exchange rates exhibit hump-shaped dynamics. I show that this is a robust fact across nine large, developed economies. This fact can help explain why sticky price business cycle models have been unable to match the persistence of the real exchange rate. I show that, in response to a number of different real shocks, a two-country sticky price business cycle model yields hump-shaped dynamics for the real exchange rate. The hump-shaped dynamics generated by the model are a powerful source of endogenous persistence that allows the model to match the long half-life of the real exchange rate. (JEL F31)

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