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Exchange Rate Dynamics Redux

Author

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  • Maurice Obstfeld and Kenneth Rogoff.

Abstract

We develop an analytically tractable two-country model that marries a full account of global macroeconomic dynamics to a supply framework based on monopolistic competition and sticky nominal prices. The model 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. Our analysis leads to a novel perspective on the international welfare spillovers due to monetary and fiscal policies.

Suggested Citation

  • Maurice Obstfeld and Kenneth Rogoff., 1995. "Exchange Rate Dynamics Redux," Center for International and Development Economics Research (CIDER) Working Papers C95-048, University of California at Berkeley.
    • Handle: RePEc:ucb:calbcd:c95-048
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    References listed on IDEAS

    as
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    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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