A General Equilibrium Model with Real Exchange Rates

Leonardo Tariffi ()
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Leonardo Tariffi: University of Barcelona

No 2024/476, UB School of Economics Working Papers from University of Barcelona School of Economics

Abstract: I first write a partial equilibrium model “á la Rogoff†where there are relative prices of non-tradable goods in terms of prices of tradables goods. I find that the behaviour of the real exchange rate shows structural breaks in the short term. Secondly, I explain that any change in the real exchange rate is transitory in the long run. I obtain a general equilibrium model after I add a utility function to the partial-equilibrium model. In the general equilibrium model, an increase occurring in consumption of tradables is going to keep the RER constant over the time.

Keywords: Exchange rate; Non-tradable goods; General equilibrium model; Dynamics (search for similar items in EconPapers)
JEL-codes: F31 F41 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2024
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