The Bickerdike-Robinson-Lerner condition and the dynamics of the real exchange rate

Detalhes bibliográficos
Autor(a) principal: Brito, Paulo
Data de Publicação: 1995
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
Texto Completo: http://hdl.handle.net/10400.5/22672
Resumo: This paper presents a dynamic general equilibrium model of the real exchange rate for a semi-small open economy, within the Obstfeld-Svensson-Raziu tradition. The dynamics of the real exchange rate is determined jointly with the dynamics of capital accumulation and external debt, in a neoclassical economy with intertemporally independent preferences. Two main features of the model are shown to be crucial for the comparative dynamics results: a Bickerdicke-Robinson-Lerner condition and the consideration of imports of foreign goods for investment. If there are no imports for investment then shocks in the fundamentals (productivity and autonomous external demand) will imply a short run appreciation of the real exchange rate followed by a trajectory of depreciation. If there are imports for investment, the short run response of the total real investment is larger and will behave as a substitute for later increases in the capital stock. This implies that the behavior of the model will tend to be ambiguous.
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spelling The Bickerdike-Robinson-Lerner condition and the dynamics of the real exchange rateOpen EconomyInvestmentFinancial MarketsMonetary PolicyExchange RatesEquilibrium ModelThis paper presents a dynamic general equilibrium model of the real exchange rate for a semi-small open economy, within the Obstfeld-Svensson-Raziu tradition. The dynamics of the real exchange rate is determined jointly with the dynamics of capital accumulation and external debt, in a neoclassical economy with intertemporally independent preferences. Two main features of the model are shown to be crucial for the comparative dynamics results: a Bickerdicke-Robinson-Lerner condition and the consideration of imports of foreign goods for investment. If there are no imports for investment then shocks in the fundamentals (productivity and autonomous external demand) will imply a short run appreciation of the real exchange rate followed by a trajectory of depreciation. If there are imports for investment, the short run response of the total real investment is larger and will behave as a substitute for later increases in the capital stock. This implies that the behavior of the model will tend to be ambiguous.ISEG - Departamento de EconomiaRepositório da Universidade de LisboaBrito, Paulo2021-12-09T10:36:30Z19951995-01-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10400.5/22672engBrito, Paulo. 1995. "The Bickerdike-Robinson-Lerner condition and the dynamics of the real exchange rate ". Instituto Superior de Economia e Gestão - DE Working papers nº 7-1995/DEinfo:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-03-06T14:52:14ZPortal AgregadorONG
dc.title.none.fl_str_mv The Bickerdike-Robinson-Lerner condition and the dynamics of the real exchange rate
title The Bickerdike-Robinson-Lerner condition and the dynamics of the real exchange rate
spellingShingle The Bickerdike-Robinson-Lerner condition and the dynamics of the real exchange rate
Brito, Paulo
Open Economy
Investment
Financial Markets
Monetary Policy
Exchange Rates
Equilibrium Model
title_short The Bickerdike-Robinson-Lerner condition and the dynamics of the real exchange rate
title_full The Bickerdike-Robinson-Lerner condition and the dynamics of the real exchange rate
title_fullStr The Bickerdike-Robinson-Lerner condition and the dynamics of the real exchange rate
title_full_unstemmed The Bickerdike-Robinson-Lerner condition and the dynamics of the real exchange rate
title_sort The Bickerdike-Robinson-Lerner condition and the dynamics of the real exchange rate
author Brito, Paulo
author_facet Brito, Paulo
author_role author
dc.contributor.none.fl_str_mv Repositório da Universidade de Lisboa
dc.contributor.author.fl_str_mv Brito, Paulo
dc.subject.por.fl_str_mv Open Economy
Investment
Financial Markets
Monetary Policy
Exchange Rates
Equilibrium Model
topic Open Economy
Investment
Financial Markets
Monetary Policy
Exchange Rates
Equilibrium Model
description This paper presents a dynamic general equilibrium model of the real exchange rate for a semi-small open economy, within the Obstfeld-Svensson-Raziu tradition. The dynamics of the real exchange rate is determined jointly with the dynamics of capital accumulation and external debt, in a neoclassical economy with intertemporally independent preferences. Two main features of the model are shown to be crucial for the comparative dynamics results: a Bickerdicke-Robinson-Lerner condition and the consideration of imports of foreign goods for investment. If there are no imports for investment then shocks in the fundamentals (productivity and autonomous external demand) will imply a short run appreciation of the real exchange rate followed by a trajectory of depreciation. If there are imports for investment, the short run response of the total real investment is larger and will behave as a substitute for later increases in the capital stock. This implies that the behavior of the model will tend to be ambiguous.
publishDate 1995
dc.date.none.fl_str_mv 1995
1995-01-01T00:00:00Z
2021-12-09T10:36:30Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv http://hdl.handle.net/10400.5/22672
url http://hdl.handle.net/10400.5/22672
dc.language.iso.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv Brito, Paulo. 1995. "The Bickerdike-Robinson-Lerner condition and the dynamics of the real exchange rate ". Instituto Superior de Economia e Gestão - DE Working papers nº 7-1995/DE
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv ISEG - Departamento de Economia
publisher.none.fl_str_mv ISEG - Departamento de Economia
dc.source.none.fl_str_mv reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
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instname_str Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
instacron_str RCAAP
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reponame_str Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
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