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The Complex Dynamics of Real Exchange Rates with Countercyclical Balance of Trade

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  • Chin-Chang Lai

Abstract

We extend Dornbusch's (1973) model to determine whether the countercyclical trade balance which is often observed in real business cycle studies can be rationalized and show that the sum of export and import elasticities being less than one is responsible for the complex fluctuation of exchange rates within this exogenous-shock-free framework. Copyright Kluwer Academic Publishers 1997

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  • Chin-Chang Lai, 1997. "The Complex Dynamics of Real Exchange Rates with Countercyclical Balance of Trade," Open Economies Review, Springer, vol. 8(4), pages 393-401, October.
    • Handle: RePEc:kap:openec:v:8:y:1997:i:4:p:393-401
    DOI: 10.1023/A:1008294009159
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    References listed on IDEAS

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