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Remoteness and Real Exchange Rate Volatility
International Monetary Fund
Authors registered in the RePEc Author Service: and
Julian di Giovanni ()
IMF Working Papers from International Monetary Fund
This paper examines the impact of trade costs on real exchange rate volatility. The channel is examined by constructing a two-country Ricardian model of trade, based on the work of Dornbusch, Fischer, and Samuelson (1977), which shows that higher trade costs result in a larger nontradable sector. This, in turn, leads to higher real exchange rate volatility. We provide empirical evidence supporting the channel.
New Economics Papers: this item is included in nep-fin, nep-fmk, nep-ifn and nep-int
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Related works: Journal Article: Remoteness and Real Exchange Rate Volatility (2006) This item may be available elsewhere in EconPapers: Search for items with the same title.
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Persistent link: http://EconPapers.repec.org/RePEc:imf:imfwpa:05/01
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