We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
The Role of the Exchange Rate as a Shock Absorber in a Small Open Economy.
- Authors
Bj�F8;rnland, Hilde C.
- Abstract
This paper analyses interactions between the real exchange rate and business cycles in a small open economy like Norway. Using a structural vector autoregression model, the role of different shocks are analysed, to investigate to what extent the real exchange rate is absorbing shocks, or a source of shocks itself. The results are ambiguous. Output and the real exchange rate are mainly explained by separate shocks, so that relinquishing exchange rate independence should come at little cost. However, the importance of nominal shocks in the business cycle emphasises that stabilisation is possible. Hence, remaining monetary independence may be attractive.
- Subjects
FOREIGN exchange rates; FOREIGN exchange; BUSINESS cycles; NORWEGIAN economy; AUTOREGRESSION (Statistics); ECONOMIC stabilization
- Publication
Open Economies Review, 2004, Vol 15, Issue 1, p23
- ISSN
0923-7992
- Publication type
Article
- DOI
10.1023/B:OPEN.0000009423.30895.fe