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| Author: | Aizenman, J. |
| Title: | Monetary and real shocks, productive capacity and exchange rate regimes |
| Journal: | Economica
1994 : NOV, VOL. 61:244, p. 407-434 |
| Index terms: | MONEY EXCHANGE RATES CAPACITY |
| Language: | eng |
| Abstract: | This paper constructs an intertemporal version of a monopolistic competitive framework, where producers may diversify internationally. International diversification is shown to induce a positive correlation between the volatility of productivity shocks and investment. In the presence of a Philips curve, the expected GDP is lower under a floating exchange rate regime than under a fixed exchange rate regime. This result applies both for real and monetary shocks. |
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