Abstract

http://ssrn.com/abstract=226979
 
 

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Exchange Rate Dynamics Redux


Maurice Obstfeld


University of California, Berkeley - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Kenneth Rogoff


Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

April 1994

NBER Working Paper No. w4693

Abstract:     
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.

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Date posted: August 27, 2000  

Suggested Citation

Obstfeld, Maurice and Rogoff, Kenneth, Exchange Rate Dynamics Redux (April 1994). NBER Working Paper No. w4693. Available at SSRN: http://ssrn.com/abstract=226979

Contact Information

Maurice Obstfeld (Contact Author)
University of California, Berkeley - Department of Economics ( email )
549 Evans Hall #3880
Berkeley, CA 94720-3880
United States
510-643-9646 (Phone)
510-642-6615 (Fax)
HOME PAGE: http://emlab.berkeley.edu/users/obstfeld/
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Kenneth S. Rogoff
Harvard University - Department of Economics ( email )
Littauer Center
Room 232
Cambridge, MA 02138
United States
617-495-4022 (Phone)
617-495-7730 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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