Endogenous norms in wage and price setting and hysteresis in the real exchange rate

Real exchange rates are often ‘disconnected’ from fundamentals. Mean reversion toward equilibrium operates at a slow pace (if it operates at all), and when inflation is low the real exchange rate tracks closely the nominal exchange rate for prolonged periods of time. Using a simple open economy mode...

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Detalles Bibliográficos
Autor principal: Libman, Emiliano
Formato: Artículo
Lenguaje:en_US
Publicado: 2019
Materias:
Tipo de cambio
Inflación Económica
Economía Abierta
Acceso en línea:http://repositorio.cedes.org/handle/123456789/4493
https://doi.org/10.1111/meca.12200
Aporte de:
Respositorio Digital CRIS del CEDES - Centro de Estudios de Estado y Sociedad de Centro de Estudios de Estado y Sociedad (CEDES)
id I61-R167123456789-4493
record_format dspace
institution Centro de Estudios de Estado y Sociedad (CEDES)
institution_str I-61
repository_str R-167
collection Respositorio Digital CRIS del CEDES - Centro de Estudios de Estado y Sociedad
language en_US
orig_language_str_mv en_US
topic Tipo de cambio
Inflación Económica
Economía Abierta
spellingShingle Tipo de cambio
Inflación Económica
Economía Abierta
Libman, Emiliano
Endogenous norms in wage and price setting and hysteresis in the real exchange rate
topic_facet Tipo de cambio
Inflación Económica
Economía Abierta
description Real exchange rates are often ‘disconnected’ from fundamentals. Mean reversion toward equilibrium operates at a slow pace (if it operates at all), and when inflation is low the real exchange rate tracks closely the nominal exchange rate for prolonged periods of time. Using a simple open economy model, we show that including endogenous norms in wage and price setting in an open economy set‐up can lead to hysteresis in the real exchange rate. For a given set of fundamentals, the real exchange rate may settle down at different equilibria and exchange rate policies are not necessarily neutral in the long‐run.
format Artículo
author Libman, Emiliano
author_facet Libman, Emiliano
author_sort Libman, Emiliano
title Endogenous norms in wage and price setting and hysteresis in the real exchange rate
title_short Endogenous norms in wage and price setting and hysteresis in the real exchange rate
title_full Endogenous norms in wage and price setting and hysteresis in the real exchange rate
title_fullStr Endogenous norms in wage and price setting and hysteresis in the real exchange rate
title_full_unstemmed Endogenous norms in wage and price setting and hysteresis in the real exchange rate
title_sort endogenous norms in wage and price setting and hysteresis in the real exchange rate
publishDate 2019
url http://repositorio.cedes.org/handle/123456789/4493
https://doi.org/10.1111/meca.12200
work_keys_str_mv AT libmanemiliano endogenousnormsinwageandpricesettingandhysteresisintherealexchangerate
bdutipo_str Repositorios
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