Price Adjustment in Currency Unions

Michael Bleaney and Lin Yin

Discussion Papers from University of Nottingham, School of Economics

Abstract: In a rational expectations model, wages and prices should respond more to shocks in currency unions than in soft pegs because of the absence of exchange rate adjustment. Empirical evidence from three currency unions tends to support this hypothesis, but the rate of adjustment is slow.

Keywords: currency union; exchange rate; price JEL codes: F31 (search for similar items in EconPapers)
Date: 2015-06
New Economics Papers: this item is included in nep-mon and nep-opm
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