Fender, John; Rankin, Neil - In: Journal of International Money and Finance 30 (2011) 3, pp. 516-536
We revisit the question of why exchange-rate-based (ERB) disinflation is often expansionary. We use an analytical DGE model in discrete time with staggered wages. If the policy is unanticipated, and if the currency is pegged at the level it would have reached under unchanged policies, then a...