unfounded.
2 A Standard Small Open Economy Model
We use a standard new-keynesian small-open economy model as our workhorse since … competition and nominal rigidities
which is the reason why nominal variables have real e ects.
As in all New-Keynesian models, we … trade as other new-keynesian model do.
In fact, Lubik and Schorfheide (2007) have shown that at least for Australia, Canada …