Real Exchange Rates and Primary Commodity Prices: Mussa Meets Backus-Smith
Abstract: We show that explicitly modeling primary commodities in an otherwise totally standard incomplete markets open economy model can go a long way in explaining the Mussa puzzle and the Backus-Smith puzzle, two of the main puzzles in the international economics literature.
File(s): File format is application/pdf https://www.minneapolisfed.org/research/wp/wp781.pdf
Provider: Federal Reserve Bank of Minneapolis
Part of Series: Working Papers
Publication Date: 2021-09-24