The Liquidity Effect in a Small Open Economy Model
In this paper we construct a dynamic stochastic general equilibrium model for a small open economy allowing for perfect capital mobility. The model incorporates price rigidities in monopolistically competitive goods and labor markets and real rigidities in the form of capital adjustment costs. The model matches some nominal and real business cycle features observed in European economies and produces a significant output response to monetary policy shocks.
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|Date of creation:||1999|
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|Contact details of provider:|| Web page: http://www.bde.es/|
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