The transmission of domestic shocks in the open economy
By: Christopher J. Erceg, Christopher Gust, and David Lopez-Salido
Contributors: Gust, Christopher J.; Lopez-Salido, David; Board of Governors of the Federal Reserve System (U.S.)
Series: International finance discussion papers -- no. 906; International finance discussion papers (Online) -- no. 906.
Publisher: Federal Reserve Board
Published: 2007
Place of publication: Washington, D.C
Language: eng
Format: [electronic resource] /
Description: "This paper uses an open economy DSGE model to explore how trade openness affects the transmission of domestic shocks.  For some calibrations, closed and open economies appear dramatically different, reminiscent of the implications of Mundell-Fleming style models.  However, we argue such stark differences hinge on calibrations that impose an implausibly high trade price elasticity and Frisch elasticity of labor supply.  Overall, our results suggest that the main effects of openness are on the composition of expenditure, and on the wedge between consumer and domestic prices, rather than on the response of aggregate output and domestic prices"--Federal Reserve Board web site.
Notes: Title from PDF file as viewed on 11/30/2007.

Includes bibliographical references.

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