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Release : 1996
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Exchange Rate Dynamics Redux - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Exchange Rate Dynamics Redux write by . This book was released on 1996. Exchange Rate Dynamics Redux available in PDF, EPUB and Kindle. Until now, thinking on open economy macroeconomics has been largely schizophrenic. When it comes to analyzing exchange rate dynamics, an empirically-minded economist abandons modern current account models which, while theoretically coherent, fail to address the awkward reality of sticky nominal prices. In this paper we develop an analytically tractable two-country model that marries a full account of dynamics to a supply framework based on monopolistic competition and sticky prices. It 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. The model also leads to a novel perspective on the international welfare spillovers of monetary and fiscal policies.