TY - JOUR
T1 - Money, capital, and exchange rate fluctuations
AU - Gomis-Porqueras, Pere
AU - Kam, Timothy
AU - Lee, Junsang
PY - 2013/2
Y1 - 2013/2
N2 - We explore how the informational frictions underlying monetary exchange affect international exchange rate dynamics. Our perfectly flexible price model is capable of producing endogenously rigid international relative prices in response to technology and monetary shocks. The model is capable of accounting for the empirical regularities that the real and nominal exchange rates are more volatile than U.S. output, and that the two are positively and perfectly correlated. The model is also consistent with other standard real business cycle facts for the United States.
AB - We explore how the informational frictions underlying monetary exchange affect international exchange rate dynamics. Our perfectly flexible price model is capable of producing endogenously rigid international relative prices in response to technology and monetary shocks. The model is capable of accounting for the empirical regularities that the real and nominal exchange rates are more volatile than U.S. output, and that the two are positively and perfectly correlated. The model is also consistent with other standard real business cycle facts for the United States.
UR - http://www.scopus.com/inward/record.url?scp=84872811390&partnerID=8YFLogxK
U2 - 10.1111/j.1468-2354.2012.00735.x
DO - 10.1111/j.1468-2354.2012.00735.x
M3 - Article
SN - 0020-6598
VL - 54
SP - 329
EP - 353
JO - International Economic Review
JF - International Economic Review
IS - 1
ER -