Pricing-to-market, the interest-rate rule, and the exchange rate

Author / Creator

Obstfeld, Maurice

Available as

Online

Summary

"Even when the exchange-rate plays no expenditure-switching role, countries may wish to have flexible exchange rates in order to free the domestic interest rate as a stabilization tool. In a settin...

"Even when the exchange-rate plays no expenditure-switching role, countries may wish to have flexible exchange rates in order to free the domestic interest rate as a stabilization tool. In a setting with nontraded goods, exchange-rate movements may also enhance international risk sharing"--National Bureau of Economic Research web site

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