North-South Trade and the Non-Neutrality of International Money
AbstractThis paper develops a Ricardian model with money to study North-South trade that is mediated by the currency of the North. The model shows that an increase in the supply of Northern money results in inflation being â€œexportedâ€ to the South. The increase in the supply of Northern money also has real effects: (1) it transfers real resources from the South to the North, lowers the wage rate in the South relative to that in the North, and worsens the terms of trade for the South; and (2) it leads to structural changes in both economies by encouraging the expansion of the tradable sector in the South and the expansion of the non-tradable sector in the North.
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Bibliographic InfoPaper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 18-10.
Length: 10 pages
Date of creation: May 2010
Date of revision:
Contact details of provider:
Postal: Department of Economics, Monash University, Victoria 3800, Australia
Web page: http://www.buseco.monash.edu.au/eco/
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Find related papers by JEL classification:
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-18 (All new papers)
- NEP-INT-2010-09-18 (International Trade)
- NEP-MON-2010-09-18 (Monetary Economics)
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