Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/189485 
Year of Publication: 
1999
Series/Report no.: 
Working Paper No. 99-1
Publisher: 
University of California, Department of Economics, Davis, CA
Abstract: 
This paper offers an explanation for the persistence observed in real exchange rate movements. The model combines pricing to market behavior with sticky prices generated by staggered contracts. A translog preference structure is used to enhance both features. The paper finds that openness limits the degree of endogenous persistence. Nevertheless, the model under reasonable parameter values can replicate the serial correlation of real exchange rate data. Further, significant exchange rate volatility can be generated, and this is amplified by the presence of endogenous persistence.
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.