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The exchange rate - A shock-absorber or source of shocks? A study of four open economies

  • Artis, Michael
  • Ehrmann, Michael

The paper provides SVAR estimates for four open economies: the UK, Canada, Sweden and Denmark, making explicit a monetary policy reaction function and taking account of exchange rate targeting practices. The object of the analysis is to examine the idea that an independent money and exchange rate should allow for effective shock-absorption. A polar extreme would be that exchange markets breed their own, and destabilizing, shocks. The paper’s findings vary from one economy to another: monetary union appears easy to recommend for Sweden and Denmark, much less so for Canada and the UK.

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File URL: http://www.sciencedirect.com/science/article/pii/S0261-5606(06)00050-7
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Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 25 (2006)
Issue (Month): 6 (October)
Pages: 874-893

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Handle: RePEc:eee:jimfin:v:25:y:2006:i:6:p:874-893
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30443

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  26. Michael Ehrmann, 2000. "Comparing monetary policy transmission across European countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(1), pages 58-83, March.
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