Monetary and Exchange Rate Policy in Multisectorial Economies
AbstractWe develop a two-sector economy where each sector is classified as classical/Keynesian (contract/noncontract) in the labor market and traded/nontraded in the product market. We consider the effects of changes in monetary and exchange rate policy on sectoral and aggregate prices and outputs for different sectoral characterizations. Duca (1987) shows that nominal wage rigidity facilitates the effectiveness of monetary policy even in the classical sector. We demonstrate that trade price rigidity provides a similar path for the effectiveness of monetary policy, in this case, even when both sectors are classical.
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Bibliographic InfoPaper provided by University of Connecticut, Department of Economics in its series Working papers with number 1996-11.
Length: 21 pages
Date of creation: Aug 1996
Date of revision:
Publication status: Published in Journal of Economics and Business, July/August 1997.
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Postal: University of Connecticut 341 Mansfield Road, Unit 1063 Storrs, CT 06269-1063
Phone: (860) 486-4889
Fax: (860) 486-4463
Web page: http://www.econ.uconn.edu/
More information through EDIRC
multisectoral economies; monetary policy; exchange rate policy;
Other versions of this item:
- Ahmed, Habib & Miller, Stephen M., 1997. "Monetary and exchange rate policy in multisectoral economies," Journal of Economics and Business, Elsevier, vol. 49(4), pages 321-334.
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