Remoteness and Real Exchange Rate Volatility
This paper examines the impact of trade costs on real exchange rate volatility. The channel is examined by constructing a two-country Ricardian model of trade, based on the work of Dornbusch, Fischer, and Samuelson (1977), which shows that higher trade costs result in a larger nontradable sector. This, in turn, leads to higher real exchange rate volatility. We provide empirical evidence supporting the channel
Year of publication: |
2005
|
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Institutions: | International Monetary Fund ; International Monetary Fund (contributor) |
Publisher: |
Washington, D.C : International Monetary Fund |
Subject: | Kaufkraftparität | Purchasing power parity | Volatilität | Volatility | Theorie | Theory | Komparativer Vorteil | Comparative advantage |
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