PDF995, Job 33

A sensitivity analysis on the pricingMtoMmarket, the size of the non tradeable sector ... ь where e is the nominal exchange rate between country 1 and country 2, ...... Backus, D., P. Kehoe, and F. Kydland, International Business Cycles: Theory ...
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Real Exch. Rate

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ξ=0.5 ξ=0

0.6

Dev. from LOP

1.2 1 0.8 0.6

0.4

0.4 0.2

0.2

0 0

0

5

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10 quarters

15

20

Rel. Price of NT to T

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