Real Exchange Rates and Primary Commodity Prices: Mussa Meets Backus-Smith
We show that explicitly modeling primary commodities in an otherwise totally standard incomplete markets open economy model can go a long way in explaining the Mussa puzzle and the Backus-Smith puzzle, two of the main puzzles in the international economics literature.
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| Language: | English |
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Inter-American Development Bank
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| Subjects: | Commodity Price, Exchange Rate, Labor Market, Macroeconomy, F31 - Foreign Exchange, F41 - Open Economy Macroeconomics, Mussa puzzle;Backus-Smith puzzle, |
| Online Access: | http://dx.doi.org/10.18235/0003838 https://publications.iadb.org/en/real-exchange-rates-and-primary-commodity-prices-mussa-meets-backus-smith |
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