A Dynamic Monetary Model with Costly Foreign Currency
AbstractI present a dynamic general equilibrium monetary model with domestic and foreign currencies and a traded bond where there is an adjustment cost to switch into foreign currency. The focus is on the short versus long run trade-offs and transitional dynamics of domestic and foreign monetary disturbances as a function of attributes of currencies in utility. The main finding is that short and long run trade-offs and transitional dynamics together with the implied hysteresis property of the equilibrium are critical determinants of the qualitative results of domestic and foreign monetary disturbances in this class of model.
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Bibliographic InfoPaper provided by Department of Economics, Tufts University in its series Discussion Papers Series, Department of Economics, Tufts University with number 9907.
Date of creation: 1999
Date of revision:
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Other versions of this item:
- Marcelo Bianconi, 1999. "A dynamic monetary model with costly foreign currency," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 8(4), pages 321-342.
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