A model of sustainable exchange rates
| Pages | 195 |
Page 195
In the Bulír and Smídková model, a sustainable exchange rate is determined by external and domestic demand, the effective prices of exports and imports, and the stock of foreign direct investment (FDI). Empirically, the stock of FDI is found to be associated with an improvement in net exports.Moreover, the sustainable rate is constrained by a maximum...
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