Dominant Currency Paradigm A New Model for Small Open Economies is popular PDF and ePub book, written by Camila Casas in 2017-11-22, it is a fantastic choice for those who relish reading online the Business & Economics genre. Let's immerse ourselves in this engaging Business & Economics book by exploring the summary and details provided below. Remember, Dominant Currency Paradigm A New Model for Small Open Economies can be Read Online from any device for your convenience.
Dominant Currency Paradigm A New Model for Small Open Economies Book PDF Summary
Most trade is invoiced in very few currencies. Despite this, the Mundell-Fleming benchmark and its variants focus on pricing in the producer’s currency or in local currency. We model instead a ‘dominant currency paradigm’ for small open economies characterized by three features: pricing in a dominant currency; pricing complementarities, and imported input use in production. Under this paradigm: (a) the terms-of-trade is stable; (b) dominant currency exchange rate pass-through into export and import prices is high regardless of destination or origin of goods; (c) exchange rate pass-through of non-dominant currencies is small; (d) expenditure switching occurs mostly via imports, driven by the dollar exchange rate while exports respond weakly, if at all; (e) strengthening of the dominant currency relative to non-dominant ones can negatively impact global trade; (f) optimal monetary policy targets deviations from the law of one price arising from dominant currency fluctuations, in addition to the inflation and output gap. Using data from Colombia we document strong support for the dominant currency paradigm.
Detail Book of Dominant Currency Paradigm A New Model for Small Open Economies PDF
- Author : Camila Casas
- Release : 22 November 2017
- Publisher : International Monetary Fund
- ISBN : 9781484330609
- Genre : Business & Economics
- Total Page : 62 pages
- Language : English
- PDF File Size : 17,8 Mb
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