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Title: |
Openness and the Output-Inflation Tradeoff:
Floating vs. Fixed Exchange Rates |
| Author: |
Yuen, Chi-Wa |
| Author
Affiliation: |
Peking U and
Wuhan U |
| Source: |
International Economic Journal, Winter 2002, v. 16, no. 4, pp. 1-26 |
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Publication Date: |
Winter 2002 |
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Abstract: |
The paper is
an attempt to understand how globalization (in the form of opening up an
otherwise closed economy to commodity trade and foreign investment)
would interact with the exchange rate regime chosen by a small open
economy to determine its output-inflation tradeoff. Based on the
stochastic dynamic Mundell-Fleming model, our theory suggests that,
under "normal" circumstances, the Phillips curve would be flatter under
a fixed exchange rate regime. We also provide some empirical support
based on Hong Kong data. |
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