The Exchange Rate in a Dynamic-Optimizing Current Account Model with Nominal Rigidities - A Quantitative Investigation (Electronic book text)


During the last decade, much effort has been devoted to the development of dynamic open economy business cycle models with explicit microfoundations. This work is often referred to as the dynamic-optimizing approach to the current account or as the international Real Business Cycle approach (see, e.g., Razin (1995) and Backus, Kehoe and Kydland (1995) for detailed surveys of that work). That research studies models with forward-looking rational agents who trade in international goods and asset markets. With rare exceptions (see discussion below) that literature has either considered models without money or models in which money is neutral (or almost neutral) as prices and wages are assumed fully flexible.2 In these models, non-monetary shocks (shocks to technologies, preferences, fiscal policy or the terms of trade) are the main source of economic fluctuations.

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During the last decade, much effort has been devoted to the development of dynamic open economy business cycle models with explicit microfoundations. This work is often referred to as the dynamic-optimizing approach to the current account or as the international Real Business Cycle approach (see, e.g., Razin (1995) and Backus, Kehoe and Kydland (1995) for detailed surveys of that work). That research studies models with forward-looking rational agents who trade in international goods and asset markets. With rare exceptions (see discussion below) that literature has either considered models without money or models in which money is neutral (or almost neutral) as prices and wages are assumed fully flexible.2 In these models, non-monetary shocks (shocks to technologies, preferences, fiscal policy or the terms of trade) are the main source of economic fluctuations.

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Not Avail

Country of origin

United States

Release date

1997

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Format

Electronic book text

Pages

52

ISBN-13

978-6613871862

Barcode

9786613871862

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LSN

6613871869



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