the euro-dollar exchange rate, within a three-country, three-currency portfolio model. Our static model shows that the … euro-dollar rate, whatever the exchange-rate regime of China. Moving to a dynamic, stock-flow framework, we show that the …

extensive margins. We also provide some evidence that the euro had an additional positive effect on the extensive margin; this … effect is not related to the reduced nominal exchange rate volatility. This suggests a new varieties effect of the euro. …