Arbeitspapier
Optimal contract currencies and exchange rate policy
The paper develops a simple stochastic new open macroeconomic model in which pricesetting firms' choice between producer currency pricing and local currency pricing is endogenous. We show that, in equilibrium, firms will denominate their export price contracts in the currency of the country with the lowest level of monetary variability. A welfare maximising government's choice of exchange rate regime is also analysed, and we find that a fixed exchange rate is preferable if the domestic monetary variability is higher than the foreign one.
- Language
-
Englisch
- Bibliographic citation
-
Series: Danmarks Nationalbank Working Papers ; No. 3
- Classification
-
Wirtschaft
- Subject
-
new open-economy macroeconomics
producer currency pricing
local currency pricing
endogenous contract currencies
optimal exchange rate regime
Wechselkurspolitik
Preisrigidität
Offene Volkswirtschaft
Anpassungskosten
Duopol
Theorie
- Event
-
Geistige Schöpfung
- (who)
-
Storgaard, Peter Ejler
- Event
-
Veröffentlichung
- (who)
-
Danmarks Nationalbank
- (where)
-
Copenhagen
- (when)
-
2002
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Storgaard, Peter Ejler
- Danmarks Nationalbank
Time of origin
- 2002
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