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Exchange Rate Dynamics Redux

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  • Obstfeld, Maurice
  • Rogoff, Kenneth

Abstract

We develop an analytically tractable two-country model that marries a full account of global macroeconomic dynamics to a supply framework based on monopolistic competition and sticky nominal prices. The model offers simple and intuitive predictions about exchange rates and current accounts that sometimes differ sharply from those of either modern flexible-price intertemporal models, or traditional sticky-price Keynesian models. Our analysis leads to a novel perspective on the international welfare spillovers due to monetary and fiscal policies.

Suggested Citation

  • Obstfeld, Maurice & Rogoff, Kenneth, 1995. "Exchange Rate Dynamics Redux," CEPR Discussion Papers 1131, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:1131
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    More about this item

    Keywords

    Current Account; Exchange Rate Dynamics; Sticky-Price Macroeconomic Models;

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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