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Can a real business cycle model without price and wage stickiness explain UK real exchange rate behaviour?

  • Meenagh, David
  • Minford, Patrick
  • Nowell, Eric
  • Sofat, Prakriti

This paper establishes the ability of a Real Business Cycle model to account for UK real exchange rate behaviour. The model is tested by the method of indirect inference, bootstrapping the errors to generate 95% confidence limits for a time-series representation of the real exchange rate, as well as for various key data moments. The results suggest RBC models can explain real exchange rate movements.

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Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 29 (2010)
Issue (Month): 6 (October)
Pages: 1131-1150

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Handle: RePEc:eee:jimfin:v:29:y:2010:i:6:p:1131-1150
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30443

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