Beyond Competitive Devaluations: The Monetary Dimensions of Comparative Advantage
By: Bergin, Paul R. and Corsetti, Giancarlo
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Material type: 
BookPublisher: American Economic Journal Macroeconomics Description: 12(4), Oct, 2020: p.246-286.Subject(s): Neoclassical models of trade
In:
American Economic Journal MacroeconomicsSummary: Motivated by the long-standing debate on competitive devaluation, we propose a new perspective on how monetary and exchange rate policies can contribute to a country's international competitiveness. We refocus the analysis on the implications of monetary stabilization for a country's comparative advantage. We develop a two-country New Keynesian model with two tradable sectors in each country: one perfectly competitive, the other producing differentiated goods under monopolistic competition subject to sunk entry costs and nominal rigidities and hence more sensitive to macroeconomic uncertainty. Monetary policy can disproportionately foster competitiveness of differentiated goods firms, ultimately affecting the composition of domestic output and exports. – Reproduced
| Item type | Current location | Call number | Vol info | Status | Date due | Barcode |
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Articles
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Indian Institute of Public Administration | 12(4), Oct, 2020: p.246-286 | Available | AR124540 |
Motivated by the long-standing debate on competitive devaluation, we propose a new perspective on how monetary and exchange rate policies can contribute to a country's international competitiveness. We refocus the analysis on the implications of monetary stabilization for a country's comparative advantage. We develop a two-country New Keynesian model with two tradable sectors in each country: one perfectly competitive, the other producing differentiated goods under monopolistic competition subject to sunk entry costs and nominal rigidities and hence more sensitive to macroeconomic uncertainty. Monetary policy can disproportionately foster competitiveness of differentiated goods firms, ultimately affecting the composition of domestic output and exports. – Reproduced
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