Cavallo, Michele (contributor); Tille, Cédric (contributor) - 2006
dollar, the euro, and the yen, respectively. The three bilateral nominal exchange rates in our setup
are EU,E, EU,A, and EE …,A, with an increase in EU,E reflecting a nominal depreciation of the dollar
against the euro. While nominal exchange rates … depreciation of the dollar against
the euro is exactly offset by an increase in the consumer price index (5) in the U.S., then the …