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Real Exchange Rates and Sectoral Productivity in the Eurozone
2014
Federal Reserve Bank of Dallas, Globalization and Monetary Policy Institute Working Papers
We investigate the link between real exchange rates and sectoral TFP for Eurozone countries. We show that real exchange rate variation, both cross-country and time series, closely accords with an amended Balassa-Samuelson interpretation, incorporating sectoral productivity shocks and a labor market wedge. We construct a DSGE model to generate a cross-section and time series of real exchange rates to compare to data. Estimates from simulated regressions are very similar to estimates for Eurozone
doi:10.24149/gwp196
fatcat:tzn3d45l6vezxesmby47ywlw6m