Varieties and imbalances: the extensive margins of the current account adjustment

are accounted for, relative to traditional macromodels. We also find that, for reasonable parameterizations, consumption and employment (hence welfare) are not highly sensitive to product differentiation, and change little regardless of whether adjustment occurs through movements in relative prices or quantities. This result warns against interpreting the size of real depreciation associated with trade rebalancing as an index of macroeconomic distress.

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Year of publication:	2008
Authors:	Martin, Philippe ; Pesenti, Paolo ; Corsetti, Giancarlo
Institutions:	Society for Economic Dynamics - SED

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Extent:	application/pdf
Series:	2008 Meeting Papers.
Type of publication:	Book / Working Paper
Notes:	The text is part of a series 2008 SED Meeting Papers Number 605
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011081070