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2005 | 52 | 6 | 556-575

Article title

Nominal growth in a small open economy

Authors

Title variants

Languages of publication

HU

Abstracts

EN
This paper develops a flexible price, two-sector nominal growth model, to study the nominal effect of capital accumulation (nominal and real convergence). The authors adopt a classical model of a small open economy with traded and non-traded goods, and enrich its structure with gradual investment and a preference for real money holdings. The modelling framework gives the following results. (1) The level of the exchange rate has a medium-run impact on nominal and real variables but no long-run effect on real variables. (2) Along the real equilibrium path of the economy, capital accumulation implies an increase of the price of non-tradables (real appreciation). (3) By comparing the nominal and the real equilibrium paths, the authors introduce a notion of misalignment. (4) The same comparison makes it possible to analyse the effect of misalignment on nominal and real variables.

Year

Volume

52

Issue

6

Pages

556-575

Physical description

Document type

ARTICLE

Contributors

author
author
  • P. Benczur, no address given, contact the journal editor

References

Document Type

Publication order reference

Identifiers

CEJSH db identifier
07HUAAAA02955985

YADDA identifier

bwmeta1.element.81c17d9f-d85a-3f7c-9ae6-4e46faaa64fa
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