Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5067063 | European Economic Review | 2012 | 22 Pages |
Abstract
⺠We develop a two-sector model where the economy faces a constraint on capital inflows. ⺠Real exchange rate (RER) determinants depend on the country's ability to borrow from foreigners. ⺠In a constrained steady state, the RER depends on both net foreign assets and productivity. ⺠In an unconstrained economy, the RER depends only on productivity. ⺠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
Dimitris K. Christopoulos, Karine Gente, Miguel A. León-Ledesma,