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| Author: | Hau, H. |
| Title: | Real exchange rate volatility and economic openness: theory and evidence |
| Journal: | Journal of Money, Credit and Banking
2002 : AUG, VOL. 34:3, part 1, p. 611-630 |
| Index terms: | Monetary policy International trade European monetary system Exchange rates Volatility European Union |
| Language: | eng |
| Abstract: | The author relates the volatility of the trade -weighted effective real exchange rate to the degree of trade openness of an economy. Both monetary and aggregate supply shocks are shown to produce smaller real exchange rate movements if the country is more open to foreign trade. Differences in trade openness explain a large part of the cross-country variation in the volatility of the effective real exchange rate. |
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