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The transmission of correlated shocks under mixed exchange rates

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  • Sundararajan, Srinivasa

Abstract

The transmission of correlated economic disturbances is analyzed in a three-country world, where two countries have no macroeconomic impact on a third country but are large enough to influence each other under a system of mixed exchange rates-a system that combines both fixed and flexible exchange rates. Drawing insights from a theoretical three-country model, I present and discuss the consequences for small countries of a variety of correlated shocks under different degrees of indexation. The implications of the results are also indicated

Suggested Citation

  • Sundararajan, Srinivasa, 1994. "The transmission of correlated shocks under mixed exchange rates," Discussion Papers, Series II 245, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    • Handle: RePEc:zbw:kondp2:245
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    References listed on IDEAS

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    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

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