Working Paper
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.
Keywords: Primary commodity prices; Mussa puzzle; Backus-Smith puzzle;
https://doi.org/10.21034/wp.781
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Bibliographic Information
Provider: Federal Reserve Bank of Minneapolis
Part of Series: Working Papers
Publication Date: 2021-09-24
Number: 781