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| Author: | Ohanian, L. Stockman, A. |
| Title: | Short-run independence of monetary policy under pegged exchange rates and effects of money on exchange rates and interest rates |
| Journal: | Journal of Money, Credit and Banking
1997 : NOV, VOL. 29:4/2, p. 783-806 |
| Index terms: | MONEY EXCHANGE RATES MONETARY POLICY |
| Language: | eng |
| Abstract: | This paper examines the effects of money supply changes on exchange rates, interest rates, and production in an optimizing two-country model in which some sectors of the economy have predetermined nominal prices in the short run and other sectors have flexible prices. Money supply shocks have liquidity effects both within and across countries and induce a cross-country real interest differential. The model predicts that liquidity effects are highly nonlinear. |
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