Propagation of nominal shocks in open economies

Arbeitspapier

Empirical evidence documents substantial persistence in the adjustment process to nominal shocks. Existing open-economy models have failed either to generate interesting dynamics or found that the mechanisms are quantitatively weak. We consider the propagation of nominal shocks in a fully specified stochastic intertemporal open-economy model with incomplete capital markets and staggered nominal wage contracts. It is shown that persistence depends on wage-price interdependencies (spiral), which in turn in a general-equilibrium setting depends on structural parameters characterizing both the demand and the supply side of markets. Parameter choices strengthening wage-price interdependencies thus strengthen persistence as is demonstrated analytically and illustrated numerically. A further product of the paper is that it develops a method by which to solve explicitly for a stochastic intertemporal version of the New Open-Economy Macroeconomics model in which the expenditure switching effect is effective.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Danmarks Nationalbank Working Papers ; No. 5

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Business Fluctuations; Cycles ; Open Economy Macroeconomics
• Thema: current account ; exchange rates ; incomplete capital markets ; nominal shocks ; persistence ; staggering ; Schock ; Offene Volkswirtschaft ; Leistungsbilanz ; Zwei-Länder-Modell ; Theorie

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Andersen, Torben M. ; Beier, Niels C.
• Ereignis: Veröffentlichung
• (wer): Danmarks Nationalbank
• (wo): Copenhagen
• (wann): 2002

Weitere Informationen

• Handle: http://hdl.handle.net/10419/82368
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ