EconPapers    
Economics at your fingertips  
 

Endogenous tradability and some macroeconomic implications

Paul Bergin and Reuven Glick ()

Journal of Monetary Economics, 2009, vol. 56, issue 8, 1086-1095

Abstract: While nontraded goods play an important role in many open economy macroeconomic models, these models have difficulty explaining the low volatility in the relative price of nontraded goods. In contrast to macroeconomic convention, this paper argues that the share of nontraded goods is endogenous, a time-varying product of macroeconomic shocks and trade costs that are heterogeneous across goods. A simple open economy model demonstrates that trade cost heterogeneity and a time-varying margin of tradedness dramatically reduces the volatility of nontraded prices. This also reduces the ability of real exchange rate adjustments to dampen current account imbalances.

Keywords: Nontraded; goods; Trade; cost; Heterogeneity; Relative; prices (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304-3932(09)00128-7
Full text for ScienceDirect subscribers only

Related works:
Chapter: Endogenous Tradability and Some Macroeconomic Implications (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:56:y:2009:i:8:p:1086-1095

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-10-12
Handle: RePEc:eee:moneco:v:56:y:2009:i:8:p:1086-1095