Purchasing power parity versus fixed exchange rate rules: A stability and welfare analysis
Data(s) |
01/06/2012
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Resumo |
This paper evaluates the desirability of PPP rules vis-á-vis fixed exchange rates both in terms of welfare and stability properties. The analysis is conducted within a small open-economy New Keynesian framework extended to include a cost channel. In terms of stability, we find that while the equilibrium is always unique under fixed exchange rates its uniqueness critically depends upon the presence/absence of the cost channel under a PPP rule. Overall, then, in terms of welfare a fixed exchange rate always outperforms a PPP rule. |
Identificador | |
Idioma(s) |
eng |
Direitos |
info:eu-repo/semantics/restrictedAccess |
Fonte |
Shin , J K & Subramanian , C 2012 , ' Purchasing power parity versus fixed exchange rate rules: A stability and welfare analysis ' Manchester School , vol 80 , no. 3 , pp. 321-354 . DOI: 10.1111/j.1467-9957.2011.02244.x |
Palavras-Chave | #/dk/atira/pure/subjectarea/asjc/2000/2002 #Economics and Econometrics |
Tipo |
article |