A Two-Country NATREX Model for the Euro/Dollar
AbstractThis paper develops a NATREX (NATural Real EXchange rate) model for two large economies, the Eurozone and the United States. The NATREX approach has already been adopted to explain the medium-long term dynamics of the real exchange rate in a number of industrial countries. So far, however, it has been applied to a one-country framework where the "rest of the world" is treated as given. In this paper, we build a NATREX model where the two economies are fully specified and allowed to interact. Our theoretical model offers the basis for empirical estimation of the euro/dollar equilibrium exchange rate that will be carried out in future research. JEL classification: F31; F36; F47
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 4046.
Date of creation: Apr 2007
Date of revision:
Key words: NATREX; equilibrium exchange rate; euro/dollar; structural approach;
Other versions of this item:
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- F31 - International Economics - - International Finance - - - Foreign Exchange
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-07-20 (All new papers)
- NEP-CBA-2007-07-20 (Central Banking)
- NEP-EEC-2007-07-20 (European Economics)
- NEP-IFN-2007-07-20 (International Finance)
- NEP-MON-2007-07-20 (Monetary Economics)
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