Ferrero, Andrea; Gertler, Mark; Svensson, Lars E. O. - 2008
"We explore the implications of current account adjustment for monetary policy within a simple two-country DSGE model …. Our framework nests Obstfeld and Rogoff's (2005) static model of exchange rate responsiveness to current account reversals … burn" where the adjustment of the current account deficit of the home country is smooth and slow. The second is a "fast …