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| Tekijä: | Novy, D |
| Otsikko: | Trade costs and the open macroeconomy |
| Lehti: | Scandinavian Journal of Economics
2010 : SEP, VOL 112:3 p. 514-545 |
| Asiasana: | economic integration macroeconomics consumption volatility exchange rates international trade |
| Kieli: | eng |
| Tiivistelmä: | Trade costs are a major obstacle to international economic integration. In the footsteps of the approach of New Open Economy Macroeconomics, this paper inspects the impacts of international trade costs in a micro-founded general equilibrium model that allows for different magnitudes of exchange rate pass-through. Trade costs are verified to create an endogenous home bias in consumption. The model performs well in matching empirical trade proportions for OECD countries. In addition, trade costs diminish cross-country output and consumption correlations, and they intensify exchange rate volatility. Trade costs change a monetary expansion to a beggar-thy-neighbor policy. |
SCIMA