Stabilization policy in multi-country models

Nikolaus K. A. Läufer and Srinivasa Sundararajan

No 170, Discussion Papers, Series II from University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy"

Abstract: This paper analyzes the international transmission of economic distur-bances in a three-country world where two countries have no macroeconomic impact on a third country but are large enough to influence each other un-der fixed and flexible exchange rates. While the fixed exchange rate (FER) regime is shown to insulate the domestic economy from monetary shocks, the flexible exchange rate (FLER) regime is shown to be effective in dam-pening the impact of real shocks on domestic Output. As far as the shocks coming from the large country are concemed, the exchange rate flexibility serves as an important tool in reducing the variability of output.

Date: 1992
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/101652/1/746304927.pdf (application/pdf)

Related works:
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:zbw:kondp2:170

Access Statistics for this paper

More papers in Discussion Papers, Series II from University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy" Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics (econstor@zbw-workspace.eu).