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Expectations and exchange rate dynamics: a state-dependent pricing approach Author info | Abstract | Publisher info | Download info | Related research | Statistics Anthony E. Landry
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We introduce elements of state-dependent pricing and strategic complementarity into an otherwise standard New Open Economy Macroeconomics (NOEM) model. Relative to previous NOEM works, there are new implications for the dynamics of real and nominal economic activity: complementarity in the timing of price adjustment alters an open economy's response to monetary disturbances. Using a two-country Producer-Currency-Pricing environment, our framework replicates key international features following a domestic monetary expansion: (i) a delayed surge in inflation across countries, (ii) a delayed overshooting of exchange rates, (iii)a J-curve dynamic in the domestic trade balance, and (iv) a high international output correlation relative to consumption correlation. Overall, the model is consistent with many empirical aspects of international economic fluctuations, while stressing pricing behavior and exchange rate effects highlighted in traditional Keynesian works.>
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Ambler, S. & Cardia, E. & Zimmermann, C., 2000.
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Cahiers de recherche
2000-05, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
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Handbook of International Economics ,
in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 35, pages 1801-1864
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Working Paper
0107, Federal Reserve Bank of Cleveland.
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Lawrence J. Christiano & Martin Eichenbaum & Charles Evans, 2001.
"Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy ,"
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8403, National Bureau of Economic Research, Inc.
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Working Paper Series
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Journal of Political Economy ,
University of Chicago Press, vol. 113(1), pages 1-45, February.
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Proceedings ,
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NBER Chapters ,
in: Monetary Policy, pages 117-154
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Philippe Jeanfils, 2008.
"Imperfect exchange rate pass-through : the role of distribution services and variable demand elasticity ,"
Research series
200808-19, National Bank of Belgium.
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