Real variables and the real exchange rate: The importance of traded goods in the transmission mechanism
I find that real variables affect the real exchange rate almost entirely through the relative price of traded goods. This finding casts doubt on the theoretical literature that postulates that real shocks propagate only through the relative price of nontraded goods.
Volume (Year): 6 (2006)
Issue (Month): 1 ()
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- Neary, Peter, 1988.
"Determinants of the Equilibrium Real Exchange Rate,"
American Economic Review,
American Economic Association, vol. 78(1), pages 210-215, March.
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- Engel, C., 1996. "Accounting for U.S. Real Exchange Rate Changes," Working Papers 96-02, University of Washington, Department of Economics.
- Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72, pages 584-584. Full references (including those not matched with items on IDEAS)
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