The Mussa puzzle: A generalization

Cosimo Petracchi ()

European Economic Review, 2022, vol. 149, issue C

Abstract: One of the most compelling pieces of evidence for monetary non-neutrality is the Mussa puzzle: the break in the monetary regime when the Bretton Woods system broke down increased the volatility of not only the nominal exchange rate but the real exchange rate. Using data covering forty-four countries from 1954 to 2019, I find that the Mussa puzzle is generalizable: any break in a monetary regime that changes the volatility of the nominal exchange rate also changes the volatility of the real exchange rate. This provides further evidence of monetary non-neutrality.

Keywords: Monetary regime; Real exchange rate; Bretton Woods system; European Monetary System (search for similar items in EconPapers)
JEL-codes: E42 E52 E65 F31 F33 F36 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:149:y:2022:i:c:s0014292122001295

DOI: 10.1016/j.euroecorev.2022.104222

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