Real Shocks And Equilibrium Real Exchange Rate In A Specific Goods Model

Hee-Ho Kim and Janghwan Park
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Hee-Ho Kim: Kyungpook National University
Janghwan Park: Kyungpook National University

Korean Economic Review, 2004, vol. 20, 323-342

Abstract: We have explored a specific goods model of exchange rate determination to investigate various shocks effects on the real exchange rate. Changes in the equilibrium real exchange rate faciliate the required changes in the traded and nontraded goods prices to maintain equilibrium in the international goods markets as well as domestic markets. Likely the goods prices changes, changes in the real exchange rate depend on the sources of disturbances and market conditions. In particular, how real shocks affect the real exchange rate depends on the factor intensity of goods production and shares of consumption and production of tradable good by home and abroad.

Keywords: specific goods; equilibrium real exchange rate; tariff; endowment; technology (search for similar items in EconPapers)
JEL-codes: F1 F3 (search for similar items in EconPapers)
Date: 2004
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