The transmission of correlated shocks under mixed exchange rates

Srinivasa Sundararajan

No 245, Discussion Papers, Series II from University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy"

Abstract: The transmission of correlated economic disturbances is analyzed in a three-country world, where two countries have no macroeconomic impact on a third country but are large enough to influence each other under a system of mixed exchange rates-a system that combines both fixed and flexible exchange rates. Drawing insights from a theoretical three-country model, I present and discuss the consequences for small countries of a variety of correlated shocks under different degrees of indexation. The implications of the results are also indicated

JEL-codes: F31 (search for similar items in EconPapers)
Date: 1994
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