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How Important is the Currency Denomination of Exports in Open-Economy Models?

  • Michael Dotsey
  • Margarida Duarte

We show that standard alternative assumptions about the currency in which firms price export goods are virtually inconsequential for the properties of aggregate variables, other than the terms of trade, in a quantitative open-economy model. This result is in contrast to a large literature that emphasizes the importance of the currency denomination of exports for the properties of open-economy models.

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File URL: https://www.economics.utoronto.ca/public/workingPapers/tecipa-383.pdf
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Paper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-383.

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Length: 29 pages
Date of creation: 20 Nov 2009
Handle: RePEc:tor:tecipa:tecipa-383
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  38. Gita Gopinath & Oleg Itskhoki & Roberto Rigobon, 2010. "Currency Choice and Exchange Rate Pass-Through," American Economic Review, American Economic Association, vol. 100(1), pages 304-336, March.
  39. Stephanie Schmitt-Grohe & Martin Uribe, 2001. "Closing Small Open Economy Models," Departmental Working Papers 200115, Rutgers University, Department of Economics.
  40. Corsetti, Giancarlo & Dedola, Luca, 2002. "Macroeconomics of international price discrimination," Working Paper Series 0176, European Central Bank.
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