The real exchange rate and household consumption heterogeneity: Testing Kocherlakota and Pistaferri’s (2007) model

Robert Kollmann ()

Economics Letters, 2021, vol. 209, issue C

Abstract: Does household heterogeneity matter for exchange rate determination? This paper tests Kocherlakota and Pistaferri’s (2007) prominent heterogeneous agent model, in which the real exchange rate perfectly tracks relative domestic/foreign moments of cross-household consumption distributions. The evidence presented here indicates that the real exchange rate is disconnected from relative cross-household consumption moments.

Keywords: Household consumption heterogeneity; Real exchange rate (search for similar items in EconPapers)
JEL-codes: F3 F4 G1 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:209:y:2021:i:c:s0165176521003876

DOI: 10.1016/j.econlet.2021.110110

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