Article ID Journal Published Year Pages File Type
5067063 European Economic Review 2012 22 Pages PDF
Abstract
► We develop a two-sector model where the economy faces a constraint on capital inflows. ► Real exchange rate (RER) determinants depend on the country's ability to borrow from foreigners. ► In a constrained steady state, the RER depends on both net foreign assets and productivity. ► In an unconstrained economy, the RER depends only on productivity. ► Econometric estimates of the long-run RER behavior support theory predictions.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
Authors
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